Earned income

Money earned from employment is referred to as 'take-home pay' on universal credit statements, or as 'earned income' in legislation. It is treated differently to other forms of income or savings.

Earned income is the amount the claimant or their partner earns from their employment after:

• income tax

• national insurance (NI) contributions

• contributions towards pension schemes

The amount deducted for earned income

Claimants have 55 pence deducted from their claim for every one pound they earned during a monthly assessment period. The claimant's monthly assessment period dates can be found on the claim statement or the claimant's online claim journal.

Work allowances

Some claimants are entitled to a work allowance. The work allowance is an amount of earnings that are not included when making deductions.

A claimant can get a work allowance if they are either:

• responsible for a child

• assessed by the DWP as having limited capability for work

Work allowance amounts for April 2025 to April 2026

Claimant receiving the housing costs element, or with a separate claim for housing benefit, will be entitled to a work allowance of £411 before deductions are calculated.

Claimants who are not receiving any housing costs element or housing benefit are entitled to a higher work allowance of £684.

Self-employment

Self-employed claimants are subject to various special rules when their income is assessed, and a self-employed client disputing deductions for take-home pay may need to be referred to specialist benefits advice.

Reporting income and business expenses

Where a claimant tells the DWP they are self-employed, they will be invited to attend a gateway interview and to bring evidence that they are in gainful self-employment.

'Gainful self-employment' is where the claimant is carrying out a trade, profession or vocation as their main employment, for profit, and getting self-employed earnings.

Self-employed claimants must provide extensive evidence of their income and business expenses to the DWP so that their income for the monthly assessment period can be calculated.

If a claimant earns a large amount of money or suffers a large loss in a monthly assessment period it may also affect future assessment periods when calculating earnings and expenses.

Minimum income floor

The 'minimum income floor' is a minimum amount of money that the self-employed claimant will always be treated as if they were earning, so even in months where their income was very low or they lost money they will still be treated as earning something. 

Even if a self-employed claimant's earnings are very low, the DWP will impose a deduction based on the claimant's minimum income floor.

The minimum income floor is based on minimum wage, but can vary based on the claimant's circumstances and whether they are part of a couple. A claimant looking to work out their minimum income floor should be signposted to specialist advice.

Certain claimants are exempt from the minimum income floor either because they qualify for a 12 month start up period (see below) or if they would not normally be subject to work-related requirements. For example, if they are not subject to work-related requirements due to looking after children, recently having experiences domestic abuse, or sickness or disability.

12 month start-up period

A claimant can apply for a 12-month start-up period at their gateway interview if they:

• have not been previously self-employed while claiming universal credit

• are taking steps to increase their self-employed earnings

If they qualify then for 12 months they will not be subject to the minimum income floor. They will be assessed on their actual earnings even if they are below the minimum amount.

A claimant must attend meetings with their work coach every few months and show evidence of the steps they are taking to increase their self-employed earnings. If they do not they risk having their start-up period terminated early,

A claimant may be entitled to a new start-up period if:

• it has been more than 5 years since their last start up period

• their current self-employment is for a different trade, profession or vocation

More information

Guidance on take-home pay for professionals

Find out more about universal credit and working on the Shelter website.

Guidance for the public on earnings

Read more about universal credit and earnings on the Gov.uk website.

Guidance for the public on self-employed earnings

Read more about universal credit for the self-employed on the Gov.uk website.