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Universal Credit (UC) is gradually replacing tax credits, and some other social security benefits. Universal credit is now available across the UK and HMRC state that it is no longer possible for anyone to make a brand-new claim for tax credits. The only exception is for certain people who are granted refugee status. Instead, people are expected to claim UC or pension credit depending on their circumstances.  Currently, existing tax credit claimants can continue to renew their tax credits and/or add extra elements to their claim. See our existing tax credit claimants page for more information. Our understanding is that the majority of existing tax credit claimants will move to either universal credit or pension credit by the end of the 2024/25 tax year. You can find out more about this in our universal credit section. 

Updated on 6 April 2024

Calculating universal credit

Universal credit awards are made up of a number of elements. This page explains how universal credit awards are calculated. 

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Universal credit awards are based on monthly assessment periods. An award is calculated by totalling the various elements that you are entitled to based on your circumstances and then adjusting that maximum award to take account of your income and capital. If you have made a joint claim,  it will also take into account your partner’s circumstances, income and capital. In a small number of cases, it is possible to make a single claim even if you have a partner. Our making a universal credit claim page explains the situations where it is possible. Where these special rules apply, your partner’s capital and income will be treated as yours when working out how much universal credit you are entitled to.

The benefit cap also applies to universal credit, which can reduce the amount paid if it applies. The actual amount paid can also be affected by any overpayments that you are paying back or whether any sanctions are being applied to your claim.

Assessment periods

The amount of universal credit you are entitled to is calculated over a monthly assessment period. An assessment period begins on the first day of entitlement to universal credit and lasts for one calendar month. You cannot choose their assessment period, it is linked to the date that they claim.

Each subsequent assessment period generally begins on the same day of the month, although there is an exception where the assessment period starts on the last day of a month.

Example – Max

Max makes his first claim for universal credit on 18 September. His first monthly assessment period starts on the 18th (the first day of entitlement) and runs up to and including 17 October. His second assessment period starts on 18 October and runs up to and including 17 November. 

Calculating the award

There are five steps to calculating a universal credit award amount. Universal Credit is made up of several elements which are added together to reach a maximum amount which is then adjusted ( tapered) to account of any relevant household income, capital and so on. The benefit cap will then be applied, where relevant, to reach the award amount. The amount paid can sometimes be different to the award amount if there are adjustments to cover repayment of advances, over overpayments or deductions or sanctions.

Step 1 Calculate the maximum amount

All awards will include the appropriate standard allowance, which is dependent on the age of the claimant(s) and whether it is a joint or single claim.

Then an amount is added for each of the elements that apply based on your household circumstances during the assessment period. Some elements cannot be paid together, even if you meet the conditions – for example, it is not possible for one person to claim both the carer element and the limited capability for work related activity element together.

If you have moved to universal credit from another benefit after receiving a migration notice, you may get transitional protection. If you do get a transitional element, it will be included when calculating your maximum amount.

Adding these elements together gives the maximum amount.

Step 2 Calculate earned income

Earned income is both income from employment and self-employment. In joint claims, the figure should be the combined earned income from both claimants. There is more information in our income and universal credit section.

Work allowance

Some claimants, those with children and those with limited capability for work, are allowed to earn a certain amount before their earnings affect their universal credit award. This is called a work allowance and the amount you get depends on your circumstances such as whether you have a housing element included in your claim. The rates are available on the GOV.UK website.

If you are entitled to a work allowance, the allowance is deducted from your earned income.


Any earned income that is left after the work allowance step is then tapered, or reduced, by 55% and the remaining figure is the amount of earned income for the universal credit calculation.

Step 3 Calculate unearned income

Unearned income reduces your maximum universal credit amount £ for £, there is no taper and no work allowance for unearned income.

Unearned income can include things like income from pensions and tariff income from capital. There are some special rules for certain types of unearned income that allow it to be averaged over various periods. There is more information in our income and universal credit section

Step 4 Deduct income from maximum amount

The earned income calculated under step 2 and the unearned income under step 3 are deducted from the maximum amount in step 1. 

The benefit cap

The benefit cap is the maximum monthly amount a household can receive from certain benefits. There are several exceptions to the benefit cap rules which means it doesn’t apply in a number of situations. The rates are available on the GOV.UK website. There is more information in our benefit cap section.

If the benefit cap applies, the amount of universal credit award under Step 4 is reduced by the excess amount. Firstly, the amount of excess must be calculated. This is the amount that the universal credit award amount (plus any of the other benefits included in the benefit cap) exceeds the benefit cap but minus any amount included in the universal credit award for childcare costs. This ensures that childcare costs are protected from the cap. No reduction is applied if the childcare costs exceed the excess amount.

More information

There are some third party benefit calculators that can help calculate UC and any other benefits you may be entitled to:

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