Universal Credit and taxes: Is Universal Credit taxable?

Universal Credit is a payment given to eligible individuals to assist with their living costs. The Universal Credit benefit replaced six other benefits and is aimed at supporting those in and out of work. But is Universal Credit taxable?

What is Universal Credit?

Universal Credit is a benefit payment for those struggling financially.

The payment replaced the following benefits:

  • Child Tax Credit
  • Housing Benefit
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance.
  • Income Support
  • Working Tax Credit.


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Who is eligible to claim Universal Credit?

You are eligible to claim Universal Credit if:

  • You are out of work or on a low income
  • You are aged 18 and over
  • You are aged 16 or 17 and fit one of the exceptions
  • You or your partner is aged under State Pension age
  • You are your partner have less than £16,000 in savings
  • You live in the UK.

How much could you be entitled to get?

Universal Credit consists of a basic allowance alongside different additions such as housing costs, bringing up children, caring or sickness and disability.

The amount of Universal Credit differs depending on what income you receive from:

  • Any employment
  • A pension
  • Other benefits
  • Savings and capital above £6,000.

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The amount you will get is as follows:

  • Single claimants under 25: £342.72 per month
  • Single claimants aged 25 or over: £409.89 per month
  • Joint claimants both aged under 25: £488.59 per month
  • Joint claimants with either aged 25 or over: £594.04.

Is Universal Credit taxable?

Some state benefits are taxable, while others are tax-free.

The State Pension, Jobseeker’s Allowance and Carer’s Allowance may be subject to income tax, as well as other benefits.

Income tax, however, is not payable on other taxes such as Pension Credit and Housing Benefit.

Universal Credit is a non-taxable source of income meaning it can be left off tax returns and any other forms HMRC sends you asking about taxable income.

A full list of the current tax-free and taxable state benefits can be found here.

How to claim Universal Credit

You can apply for Universal Credit online here.

You will need to make sure you have:

  • Your bank, building society or credit union account details
  • An email address
  • Information about your housing
  • Income details
  • Savings and any investments information
  • Childcare costs

Failure to have the correct information can impact how much or when you are paid.

You will also have to verify your identity online using either: your bank account driving licence, passport or your debit or credit card.

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