How the work allowance works
The Universal Credit work allowance is a band of earnings that are completely ignored before the 55% taper is applied. In 2026/27 it is £710 per month where no housing costs element is in payment, or £427 per month where housing support is included. Only households with a child element or a limited capability for work element receive a work allowance.
For a working single parent with a housing element, the first £427 of monthly take-home earnings is fully disregarded. Only earnings above £427 reduce UC, and even then, only by 55p per pound. That means a parent earning £600/month keeps UC almost in full, only losing £108 from the taper on the £196 above the allowance.
Why the work allowance changes the return from work
Without a work allowance, the 55% taper starts from the first pound of earnings. That means a childless single adult on UC loses 55p of UC for every pound they earn from the very first pound. With a work allowance, the first slice of earnings is entirely protected.
This is one of the most important things to understand when comparing working hours. An extra hour of work at minimum wage is worth significantly more if it falls within the work allowance than if it falls above it, because within the allowance, the full hourly pay is kept rather than the 45p-per-pound post-taper gain.