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

[Justwonderingum]

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

@myluckyhelper yes better off working than UC alone. But to get that amount just by working you give up more time with your kids, associated costs eg travel etc. Plus you would get to a point where you lose personal allowance if just one parent working. And no Child benefit. £6000 a month take home must be circa £100000 annual salary top line.

Or dish out certain benefits as a safety net with time limits rather than a lifestyle choice indefinitely.

Means testing pensions will just lead to an decrease in private pension savings... bad for an already struggling economy.

How can you have benefits as a time limit?
Have you seen the threads on MN about graduate kids not getting jobs?
The job market is awful? If you time limit it... you will be pushing people out on the street.

As aheads up my child also cant eat the fsm.due to his additional needs so you are legally entitled to a reasonable adjustment. I get £15 a week voucher for a supermarket of my choice (aldi) to buy his safe foods etc as he can access the fsm. He now has eotis package and so isn't in school and they are provided by the LA. But when he was innschopl I applied to the headteacher for this adjustment. He was an arse so I took it to the governors. But it was legally mandated this year that schools must offer reasonable adjustments for these circumstances. Some schools offer to buy inthe safe foods or whatever the child needs ie if its sensory issues or an allergy that means they cant eat fsm. Or they can offer a voucher whichever works best for your child.

There are template letters to help yoh approach your child's school to ask. I will come back with links. :)

You have to earn a really low amount to be eligible for free school meals and dental etc (£7,400). We have found ourselves to be in the low income bracket since dh was made redundant and after almost a year of searching for a job in his field he has taken up a job in a cafe for minimum wage. This is a huge drop in wages for us. We have amassed a fair bit of debt whilst he was job searching as UC didn’t cover bills and living expenses as we have a mortgage so no help with that. DH May now be eligible for £200 ish UC whilst earning £800 a month (no more hours available and currently no other jobs available). I am a TA and work as full time as I can in a school but it still doesn’t bring in a huge amount. I have no idea who these people are who are earning those sums but it’s definitely not us. No DLA plus we have a mortgage so that could be why our UC payments are so low. Not eligible for any other benefits apart from child benefit.

Luckily they already do that then, being out of work for 9 months after employment leads to a cap on your benefits.

The benefit cap means it can never be a lifestyle choice. It doesn’t provide a long term liveable amount.

There's an adult day care centre about to close. The council can't afford to keep it open.
People are up in arms.
However if you ask people if they want to pay another £400 on their council tax they'll say no.

@cmonspring you can't access as much due to your home/equity in your home. It is only if on rented with low or minimal savings.

IME yes absolutely! It's not a secret that you can calculate to work so many hours/earn so much to be able to get the most out of the benefits system, especially as a single parent and/or lower earner.

Quite a few people I know, just stating fact women who are single mothers or in a relationship with a partner claiming PIP do indeed ensure they work enough to meet the ETA I think it's called. When offered the chance to work overtime or get a promotion involving more responsibility and hours, it's looked at with horror as this would impact upon payments to top up wages, rent allowances etc.

So many factual examples I could give but I will just outline one, an in law. Jade has 3 kids to 3 different dads, the relationships haven't worked out so is a SP. DC are 15, 12 and 8. She was on benefits until getting pregnant with first at age 19, then subsequently for the next two as they were young. Finally had to get a job, knew a minimum of 16 hours would be enough so got one but called in sick so much she got sacked. So, back on to full benefits and looking for work. Got her next job, which was too stressful as had to be at work for 10am 4 times a week, took too much time off, sacked again. Cycle repeats itself.

It may seem reading this that Jade had issues, couldn't cope, but no. Her parents looked after her DC, they lived there, practically brought them up during their first few years as she was out partying, taking drugs and sleeping all day.

As they got a bit older she took on a bit responsibility and had them stay over at her 4 bedroom home which she insisted was needed due to special needs, with no evidence or even any effort to diagnose, just ranting. Only when convenient for her though when she wasn't having parties or picked up a new bloke.

When the time came that she had to work, she went through the motions, expressed how hard life was as a SP with 3 DC to employers and so they were understanding that she needed to take time off because they were ill: reality GPs were taking them to nursery/school and she had just gone to bed.

Also, the dads were paying maintenance, which she insisted cash only, and involved in DC's lives so looking after them in addition to GPs.

Basically Jade had more than enough money to play the system as she had, I quote, over £1400 pm given by dads, UC, parents for childcare. So working was a case of yeah I'll do it but then I won't, still getting all the top ups for those few months barely there.

As I said, this is just one example of people I know, there are others far worse your toes will curl!

Unless you actually know anyone who deliberately calculates, you have NO idea.

This is incredibly outdated. The 16 hours rule applied to income support, which has been defunct for years.

there is no golden number of hours on UC to maximise payments. The more you earn, the more you have. I have more in my pocket working full time, than I did at 20, 25 or 30 hours a week.

and just to add - £1400 a month is not a liveable amount of money for a parent of 3 children. You would absolutely need to work on top of that to live.

Here were my figures in 2023 from a typical month (variation due to childcare costs)
Wage £1516
UC £469
Total £1985

March 2026
Wage £2293
UC £192
Total £2485

CB not included in above as no change. For full transparency I will mention benefit rates have increased since 2023. And as I said there is some variation depending on what my childcare costs are. They are lower now than they were in 2023 though.

Have you considered getting a hobby?

I sincerely hope not!

Apply and see. I think you’ll be rejected.

You won’t be rejected, she’s got her figures wrong though. If they both earned the same amount their UC entitlement would be £884 (less if they rent privately, rather than socially).

Another thread bashing benefit claimants

Yippee

It's the poverty trap. It's a feature, not a bug. It takes an immense amount of impetus to clear it and most jobs/earning patterns aren't structured that way so people stay stuck.

It's not just the taper - like a pp said it's the savings limit too. What does £6k buy you? A very shit car and no more. Certainly not a house deposit.

Plus there's council tax. As soon as you earn anything you're liable for the full amount. In many deprived areas where there aren't a lot of council tax payers anyway, that's another 10% off your income, in addition to the taper. So you only get to keep 35% of what you earn. You are vanishingly unlikely to be able to break through the barrier to self sufficiency, on that basis.

My husband and I both work. It absolutely is not worth me working any more than my part time 25 hours. Universal Credit doesn't give you £1+45p, they DEDUCT 55p of every £1 you earn over your personal allowance. You keep 45p of the £1 you earned.

So let's pretend I'm offered overtime, would I like 3 more hours each day to bring me up to full time? It will require putting the children in after school club so let's see.

3 hours at £13 per hour is £39

20% is lost to tax (I'll ignore NI and pension), that leaves £31.20

55% of this is deducted from my universal credit, leaving £14.04

3 children in after school club @£12.50 each is £37.50 of which UC covers 85%, my share is £5.63. Very generous but now I'm down to £8.41

and as it's now so late in the day I have to get a bus home rather than walk, so I have time to feed the kids and do their homework. That's £8 for the 4 of us... oh look, I've made 41p for working 3 hours.

No thanks. What would be the point? Children stuck in childcare for hours, the stress of running around to get to them on time and get everything done, less family time. When the children are older, maybe, but there's no incentive as things stand currently. Pretending people aren't doing this is ridiculous.

For reference, our income varies but on average our take home pay is around £3700 per month (around £52000 per year pre tax and NI) and we get roughly £700 in universal credit. That is going to increase by around £390 next month due to the child cap being lifted. It's a mad amount of money.

Due to the 55% deduction you make very little by working more hours if you're on a low wage and the amount you would have to earn to reduce the UC payment to £0 and be free from the benefits trap would be almost double the amount of UC you receive, then even higher to account for tax etc. Simply unattainable for many.

These figures are nonsense! What on earth are you using?

I've just ran the calculation based 4 kids, (1 with low rate dla care and mobility) 2 parents working 25 hrs pw with 70k combined salary and 1400 rent as private tenant in Warwickshire and the UC entitlement is £547.51 - including housing. However, f they have a mortgage rather than rent then their entitlement is 0!

In both cases they are entitled to child benefit of approx 347.

There is an income threshold for UC. For every penny earnt over the threshold, uc tapers off by 55p.

www.entitledto.co.uk/help/work-allowance-universal-credit

Please check your facts!!!

I don't think that's right - my understanding is that I'd only be 45p up, not £1.45 up? Eg. £1.00 (wages) - £0.55 (lost benefit) = +£0.45 However, might be wrong!

🥱done to death and always turns into a hate fest about claimants.🙋

You most definitely do not get 45p top for every pound earned that's just plain stupid.

Goodness that’s a bit bold. You quite literally do get that.

This is such an incorrect take.

Of course they’re reducing your entitlement by 55p. But as a result you’re better off becuase you have your wages PLUS UC. Instead of just UC. How can you not see that.

Using OPs own example of the £75k couple. They have £5086 in wages and £884 UC. If they didn’t work, they’d have £3447 in UC.

Yes I haven’t said you’re £1.45 better off than on UC. You’re 45p better off. You can either just have your UC, or you can have your wage plus UC. So working is always going to make you better off.

Definitely