Taper rate

As people increase their earnings, their benefit is reduced. The rate at which the benefit is reduced as their earnings increase is called the taper rate. From April 2017 UC has one taper rate for earnings set at 63%. So, once any disregarded earnings have been taken into account, UC is withdrawn at a rate of 63p for each £1 of net earnings. That means claimants will be £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. 


While the reduced taper rate is welcome, it goes nowhere near to making up the losses from changes to the work allowance. For example, public services union UNISON points to an analysis by the Resolution Foundation which shows that on average, a worker would gain only £250 a year from the 2p reduction in the taper rate, but still lose up to £2,800 a year from the previous cuts to work allowances.