Page 2 | AIBU to question whether UC rules create incentives to limit earnings?

Justwonderingum · 2026-04-10T20:35:21+00:00

Unpopular topic, I know. But I'm trying to understand how UC works. It looks to me like there is a huge gap where you are much better off limiting the hours you work, paying yourself less from your company, or even over paying into your pension as you can claim the difference in UC. Also claiming UC means you pay less for many other things, and will include free school meals soon too. So AIBU to wonder if this really is the case or are these loopholes closed? A quick play seems to suggest that even on a household income of £70000 can claim over £1000 a month, assuming 2 plus kids,including one with lower rate DLA

Original poster

Justwonderingum · 11/04/2026 14:39

Also you would be on about £75k by then, so would also lose child benefit

OP posts:

MyLuckyHelper · 11/04/2026 14:39

Justwonderingum · 11/04/2026 14:36

I also did not realise quite what a difference it makes to own your house. A mortgage doesn't make you rich, and the children don't own the house, but they are in a household with £900 less disposable income a month than another family earning the same. Whilst their friends in rental properties will get UC and therefore all associated savings. They will undoubtedly feel worse off and on a month to month basis less likely to be able to afford basics. And yes you could say sell the house then, but in many cases after costs that won't free up much capital. And often they were just trying to do their best, buying property, with what they knew or thought they knew at the time.

Rent money isn’t disposable income.

and the difference is, the mortgaged people will own a valuable asset in the future. And have the security of having a stable home, often at a far lower cost than private renters are paying.

I agree it’s tough for some, but we absolutely cannot start paying mortgages for welfare claimants.

Original poster

Justwonderingum · 11/04/2026 14:37

@MyLuckyHelper would you therefore stop earning progression at £4350? As you will lose free school meals, and other reductions based on being a recipient of UC?

OP posts:

Original poster

Justwonderingum · 11/04/2026 14:36

I also did not realise quite what a difference it makes to own your house. A mortgage doesn't make you rich, and the children don't own the house, but they are in a household with £900 less disposable income a month than another family earning the same. Whilst their friends in rental properties will get UC and therefore all associated savings. They will undoubtedly feel worse off and on a month to month basis less likely to be able to afford basics. And yes you could say sell the house then, but in many cases after costs that won't free up much capital. And often they were just trying to do their best, buying property, with what they knew or thought they knew at the time.

OP posts:

MyLuckyHelper · 11/04/2026 14:10

Legolaslady · 11/04/2026 14:04

This explains the OPs point about people seeming to get better of working less....

The Verdict: You are "better off" for every hour you work up until 39.5 hours. However, the most "efficient" balance is often around 20–25 hours. Beyond that, the combined bite of Tax, NI, and the UC Taper means you are working a lot of extra time for a relatively small increase in actual spending money, especially once you factor in paying full Council Tax.

You’re likely still paying full council tax at 20-25 hours, I’ve never had a reduction due to my income.

I work 37.5 hours now and have more money at the end of the month than when I worked fewer hours. The argument that you’re not ‘much’ better off, or it’s not worth it, is individual but doesn’t negate the fact that financially you have more.

edited to add, if I worked 40 hours, I’d still be better off - I’d have to have a net income
of £4399 before my award went to £0

Legolaslady · 11/04/2026 14:04

This explains the OPs point about people seeming to get better of working less....

The Verdict: You are "better off" for every hour you work up until 39.5 hours. However, the most "efficient" balance is often around 20–25 hours. Beyond that, the combined bite of Tax, NI, and the UC Taper means you are working a lot of extra time for a relatively small increase in actual spending money, especially once you factor in paying full Council Tax.

MyLuckyHelper · 11/04/2026 13:59

Legolaslady · 11/04/2026 13:57

You are just 45p out of every £ better off surely?
So if you work and earn £100 you get £45 of it to keep

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I’m genuinely not sure of the confusion?

If you earn £100, you get to keep all
of it. No one is helping themselves to your wages.

it’s your UC award that reduces.

so at the end of the month you have your £100 wage and your £45 from UC, instead of just your £100 from UC. (Figures aren’t accurate obviously, just examples).

so yes, you’re £45 better off for every hundred pounds you earn than if you didn’t earn anything at all. Plus you won’t be subject to the benefit cap.

Legolaslady · 11/04/2026 13:57

MyLuckyHelper · 10/04/2026 22:14

Yes, I understood what you meant. And rightly so. Why would you keep your full UC and have your wage.

the point is, you’re still better off working as you have £1 from your wage and 45p from UC, instead of just £1 from UC.

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You are just 45p out of every £ better off surely?
So if you work and earn £100 you get £45 of it to keep

stupidmowldyandassive · 11/04/2026 13:55

MyLuckyHelper · 11/04/2026 13:52

If you sell the rental, you’ll have capital they'll
expect you to live on.

You may well be entitled to some UC once the capital has gone

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That would be gone rehousing me and ex

MyLuckyHelper · 11/04/2026 13:52

stupidmowldyandassive · 11/04/2026 13:50

Sorry, I’ve updated to add I’ve looked into this as I may have to sell the rental.

I do work as well but low income and a single parent with no financial support from ex.

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If you sell the rental, you’ll have capital they'll
expect you to live on.

You may well be entitled to some UC once the capital has gone

stupidmowldyandassive · 11/04/2026 13:50

MyLuckyHelper · 11/04/2026 13:01

I doubt she would tbh, no housing costs would reduce her claim, she doesn’t say if she works, but if she doesn’t then she’s be subject to benefit caps and regular meetings at the job centre. If she does her earnings may well reduce her claim to almost nothing.

I’d cut my right arm off to be in the position where I had two houses mortgage free and could let one out as passive income. Even if I still had to work to keep afloat. It genuinely keeps me up some nights wondering where I’ll end up living when the kids are older.

Edited

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Sorry, I’ve updated to add I’ve looked into this as I may have to sell the rental.

I do work as well but low income and a single parent with no financial support from ex.

stupidmowldyandassive · 11/04/2026 13:48

Sorry, not to drip feed but the reason I’ve looked into it is because divorce proceedings may mean I have to sell the rental but I was surprised to see I’d be better off (currently stretched each month).

Original poster

Justwonderingum · 11/04/2026 13:24

@mgup if you were renting according to Entitled to you would get around £900 UC a month. It's an estimate and I've assumed you are paying a pension

AIBU to question whether UC rules create incentives to limit earnings?

OP posts:

Original poster

Justwonderingum · 11/04/2026 13:10

Money from a rental property is not the same in terms of having to give up your time with your kids in order to earn money?

OP posts:

MyLuckyHelper · 11/04/2026 13:01

Pickledonion1999 · 11/04/2026 12:58

I think the poster meant the UC she would get would be more than the rent she gets for her SECOND mortgage free home. So if she sells her second home, disposes of the money from that sale ( goodness knows how whilst not breaching deprivation of assets rules) and then claims UC she will be better off including FSM and Free music lessons ? Why anyone would want to do this is actually quite baffling.

Edited

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I doubt she would tbh, no housing costs would reduce her claim, she doesn’t say if she works, but if she doesn’t then she’s be subject to benefit caps and regular meetings at the job centre. If she does her earnings may well reduce her claim to almost nothing.

I’d cut my right arm off to be in the position where I had two houses mortgage free and could let one out as passive income. Even if I still had to work to keep afloat. It genuinely keeps me up some nights wondering where I’ll end up living when the kids are older.

Coffeeandbooks88 · 11/04/2026 12:59

Pickledonion1999 · 11/04/2026 12:58

I think the poster meant the UC she would get would be more than the rent she gets for her SECOND mortgage free home. So if she sells her second home, disposes of the money from that sale ( goodness knows how whilst not breaching deprivation of assets rules) and then claims UC she will be better off including FSM and Free music lessons ? Why anyone would want to do this is actually quite baffling.

Edited

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Yeah I realised that. Yeah UC would be all over that money.

Pickledonion1999 · 11/04/2026 12:58

Coffeeandbooks88 · 11/04/2026 12:53

How would you be better off? You have no housing costs but would rather rent and get UC? UC would class that as deprivation of assets. You sound like you are in a privileged position. Don't be daft.

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I think the poster meant the UC she would get would be more than the rent she gets for her SECOND mortgage free home. So if she sells her second home, disposes of the money from that sale ( goodness knows how whilst not breaching deprivation of assets rules) and then claims UC she will be better off including FSM and Free music lessons ? Why anyone would want to do this is actually quite baffling.

Coffeeandbooks88 · 11/04/2026 12:55

MyLuckyHelper · 11/04/2026 12:47

Making yourself worse off both financially and with long term stability would be worth considering? Wow.

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When the kids are too old to be on the claim she would regret giving up the rental income.

Coffeeandbooks88 · 11/04/2026 12:53

stupidmowldyandassive · 11/04/2026 12:37

Yes and no.

Im a single parent, I own my house mortgage free and have a mortgage free rental too (inherited). I would be better off selling the rental, getting rid of the money and claiming UC but I would lose the guarantee of income (UC rules may change) and there’s not investment.

That said, I believe I keep savings in DC bank accounts that I can access for spending on them and they wouldn’t be classed as MY savings.

How would you be better off? You have no housing costs but would rather rent and get UC? UC would class that as deprivation of assets. You sound like you are in a privileged position. Don't be daft.

Pickledonion1999 · 11/04/2026 12:48

MyLuckyHelper · 11/04/2026 12:47

Making yourself worse off both financially and with long term stability would be worth considering? Wow.

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Bonkers idea to get FSM and music lessons for a few years ! Not sure why anyone would go through the hassle of UC, bank accounts being scrutinised, at the whim of government changes constantly, limited on what you can save etc !

MyLuckyHelper · 11/04/2026 12:47

stupidmowldyandassive · 11/04/2026 12:43

Thank you, I didn’t realise that…it’s still something to consider though.

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Making yourself worse off both financially and with long term stability would be worth considering? Wow.

MyLuckyHelper · 11/04/2026 12:46

stupidmowldyandassive · 11/04/2026 12:37

Yes and no.

Im a single parent, I own my house mortgage free and have a mortgage free rental too (inherited). I would be better off selling the rental, getting rid of the money and claiming UC but I would lose the guarantee of income (UC rules may change) and there’s not investment.

That said, I believe I keep savings in DC bank accounts that I can access for spending on them and they wouldn’t be classed as MY savings.

If you can access them they’d be counted. If you sold a rental and they didn’t deem the spending to be necessary, you’d be treated as if you still had it and not eligible for UC.

also as you own your home mortgage free, the amount of UC you’d be entitled to would likely not be much. Seems daft to go through all that to be financially worse off, but whatever floats your boat I guess

stupidmowldyandassive · 11/04/2026 12:44

Just to add that not only would UC be more than the rent I would get FSM and free music lessons for DC too (no financial support from exDH)

Pickledonion1999 · 11/04/2026 12:43

stupidmowldyandassive · 11/04/2026 12:37

Yes and no.

Im a single parent, I own my house mortgage free and have a mortgage free rental too (inherited). I would be better off selling the rental, getting rid of the money and claiming UC but I would lose the guarantee of income (UC rules may change) and there’s not investment.

That said, I believe I keep savings in DC bank accounts that I can access for spending on them and they wouldn’t be classed as MY savings.

You would not be able to give away proceeds of the rental sale to your kids in order to claim UC if that's what you mean? Look up the deprivation of capital rules.

stupidmowldyandassive · 11/04/2026 12:43

cadburyegg · 11/04/2026 12:40

The only savings accounts that are disregarded are junior ISAs, where you can pay money into but you can’t draw it out. Any other accounts that you can draw money from would count towards your capital.

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Thank you, I didn’t realise that…it’s still something to consider though.