How the 55% taper works in practice
The earnings taper is one of the most important things to understand about Universal Credit. For every £1 of net earnings above your work allowance, UC is reduced by 55p. That means you keep 45p of each additional pound you earn — a real financial gain, though lower than many people expect.
A household without a work allowance faces the taper from the first pound of earnings. That makes the taper especially sharp for couples without children or health conditions.
The work allowance changes the picture significantly
If your household includes children or a limited capability for work element, you receive a work allowance — a band of earnings that are fully disregarded before the taper kicks in. In 2026/27 that is £673 a month where no housing costs element is in payment, or £404 a month where housing support is included.
Up to the allowance, every pound you earn is kept in full. Above it, you keep 45p per pound. That means there is a strong incentive to work at least enough to use the work allowance each month.
Understanding the net change per £100 earned
A useful way to think about the taper is in terms of what happens to a hypothetical extra £100 of earnings. If you are already above the work allowance, earning £100 more reduces UC by £55 — leaving you £45 better off overall.
If your earnings are below the work allowance, some or all of the £100 extra may be in the disregarded band, meaning you could keep more than £45. This calculator shows both the current deduction and the net effect of an extra £100.