Universal Credit
What is Universal Credit?
Universal Credit is a payment made to qualifying UK citizens to help with living costs. You can qualify for it if you meet one of the following criteria:
- You’re on a low income
- You’re out of work
- You cannot work
How is Universal Credit calculated?
1) Calculate standard allowance based on household type)
Broadly speaking, every household is grouped into one of the following household types which in turn gives them a monthly standard allowance (2026/27 allowances shown below):
| Household type | Monthly standard allowance |
|---|---|
| Single, under 25 | £338.58 |
| Single, 25 or over | £424.90 |
| Couple, both under 25 | £528.34 |
| Couple, one or both 25+ | £666.97 |
So supposing you’re a couple with a child aged 22, you’d fall into the Coupe, one or both 25+ household type and so get a standard allowance of £666.97.
2) Add allowance for extra elements (housing, childcare, disability, etc)
After that, you may qualify for additional elements such as:
- Housing element (to help with rent)
- Child element (to help with getting child care)
- Carer element (to help with looking after someone)
- Limited Capability for Work element (to help with health / disability challenges)
3) Apply earning deductions
Next, your UC allowance can be deducted based on your earnings (55% of all earnings above a certain allowance). See here for more details.
4) Apply other deductions
- Non-dependant deductions: £96.58 is deducted for every non-dependant adult (e.g., 20 year old son)
5) Calculate total Universal Credit allowance
After determining the standard allowance + extra elements and then applying the deductions, you get your total monthly Universal Credit allowance.
Example of how UC is calculated
- Your household type is
Couple, one or both 25+so you get a standard allowance of £666.97. - Your rent is £1,200 and your Local Housing Allowance rate is £1,246.57/month
- You have one non-dependant adult living at home so you get a deduction of £96.55/month
- You earn £1,000 a month so your allowance is deducted by £550 (55% of £1,00)
- Your UC allowance is £1266.99 (£666.97 + 1,246.57) – (£96.55 + £550)