If you are employed – the taper rate and work allowances
[ch 1: page 15]There is no limit to how many hours you can work while claiming UC, but for every £1 you earn your payment is reduced according to the “taper rate”. UC has a single taper rate for earnings, set at 63%. So, once any disregarded earnings have been taken into account (see “work allowances” below), UC is withdrawn at a rate of 63p for each £1 of net earnings. That means claimants are £37 better off for every £100 they earn. Statutory payments, such as Statutory Sick Pay, are treated in the same way as income from earnings.
Most income from other sources which a person could use to meet their living costs, for example early retirement pension or maintenance payments, is taken into account in full, so that UC is reduced £1 for £1.
The 63p taper rate was a reduction from the previous 65p in April 2017. This was welcomed, but it went nowhere near to making up the losses from previous changes to the work allowance (see below).
There are different rules for people who are self-employed (see pages 16-17).