Universal Credit (earning disregards)

In this series we aim to highlight specific parts of the universal credit that will hopefully prove useful to people applying for the Universal Credit in 2013.
We have decided to take a look at the  annexes of the DWP document “Welfare that works”. In this profile we look at how the DWP envisages the treatment of earnings and income in respect of the Universal Credit.

Earning disregards

In Universal Credit,  different amounts will be disregarded from earnings before the taper applies in order to reflect the needs of different families and ensure that work pays. The amount to be disregarded will be reduced to reflect support people receive for rent or mortgage interest support.The actual disregard levels will be set closer to the date of implementation. We currently envisage maximum disregards (annual figures) of around:
couple: £3,000 plus £2,700 per household for a child (regardless of number of children); lone parent: £5,000 plus £2,700 per household for a child; and disabled people: £7,000 per household if a recipient or either partner in a couple is disabled.
The reduction for housing costs goes as far as a ‘disregard floor’. The annual amounts we have modelled are:
couple: £520 per household plus £520 for the first child, £260 for each of the second and third children; lone parent: £1,560 per household plus £520 for the first child, £260 for each of the second and third children; and disabled people: £2,080.

37 We envisage that disregards will be reduced by one-and-a-half times the recipient’s eligible rent or mortgage interest
“We do not expect to include a disregard for a single person without children – any earnings would be tapered off straight away.”
The above information is from the DWP “welfare that works” document and further worked examples can be found on the DWP website in the annexes section

4 Comments

  1. louise says:

    Only 1 disregard for possibly 3 kids?, a 1 parent family needs £2000 more a year than a 2 parent family??….This will encourage single parents all the more. Yes it will of great satisfaction in 40 years time to know how the elderly will survive if everyone has 1 child each, who will pay the tax then?.

    Reply
  2. Jaki says:

    So I am a single disabled person living with a sibling who is also disabled. What is my/our separate earnings disregard? It says per household but we are two single disabled people. I am confused. If anyone can clarify this it would help. Thanks

    Reply
  3. Alanna Cohen says:

    CPAG (child poverty action group) said (in Feb 2012)
    Max disregards
    Couple £3k plus £4250 per household for a child(regardless how many)
    Lone parent £9k per household
    Disabled people £7k per household
    Single person no kids £700
    Disregard floors
    Couple £1920 plus £520 for 1st chid, £260 for second and third
    Lone parent £2260 plus kids as for couple
    Disabled people £2080

    Reply
  4. John Poynton says:

    This is a mess. The tendency to complicate has reasserted itself. The needs of a family are already covered by the gross benefit award. The purpose of the disregard is quite different, namely solely to create an incentive to find work.
    I cannot see therefore why the disregard should be different for each partner in a couple or in different circumstances. If anything, we should be discouraging second partners with young children from finding work, or at least leave the situation neutral. This should be looked at again, but I propose that each individual, irrespective of circumstances or whether they are part of a couple or not, be entitled to a disregard of £25pw.
    The proposed single person’s disregard of £13.46pw is still unlikely to stir most people from their slumbers.

    Reply

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