Step 2

Deductions for earned income (if you’re employed)

You should have already worked out the Maximum Universal Credit amount in step 1. Deductions may be made from this figure for your earned income, unearned income, and because of the Benefit Cap.

‘Earned income’ includes both: employed earnings, and self-employed earnings. What counts in either situation is the amounts you receive in the assessment period.

If you are confident that neither you nor your partner has any earned income you can go straight to step 3.

If you or your partner are self-employed (or both employed and self-employed) you can work out your earned income on the self-employed earnings page instead.

What counts as employed earnings

  • wages;
  • overtime pay;
  • tips, bonuses, and commission;
  • holiday pay;
  • sick pay (including SSP);
  • pay for parental leave (including SMP, SPP, SAP, SSPP, and SPBP);
  • tax & NI rebates; and
  • equal pay settlements

The DWP knows what you earn

You don’t need to report your employed earnings each month. The DWP will already have this information and calculate it automatically. This is because employers are required to report the amount they pay you and the amount of any deductions (such as for tax, national insurance, or pensions) to HMRC when they pay you (or shortly beforehand). This system is called Real Time Information (RTI).

How often you’re paid is very important!

As mentioned above, what counts as earned income are the amounts you receive in each monthly assessment periods. If you are paid calendar monthly this is quite straightforward, but if you are paid weekly, fortnightly, or four weekly it is more complicated.

Weekly pay

If you’re paid weekly there will be 8 months of the year in which you’re paid 4 times