This post was updated on 8 April 2022
Hi Mike
I work in a hostel and came to your training on Universal Credit and PIP.
I have a resident who has been working earning around £150 pw, her universal credit claim has been stopped but her housing benefit claim is still going.
I was wondering if you know how I can work out in cases like this how much rent contribution the tenant would have to pay if they decide to work?
Lucy
Hi Lucy
UC can include a Housing Costs Element to help with rent. But if you live in supported accommodation, such as a hostel or refuge, you claim help with your rent through Housing Benefit, alongside your Universal Credit claim.
UC and Work
UC says that your tenant (under 25) needs £265.31 per month to live on. If she wasn’t working this is what they would pay to her.
While she gets UC she also gets maximum HB.
Because she is working they reduce the UC.
Every pound of earnings reduces the UC by £0.55.
If she earned £482 in a month they would reduce the UC by £265.10 (0.55 x £482).
She would still get UC of £0.21, so she would still get maximum HB.
But, if she earned £483 in a month they would reduce the UC by £265.65 (0.55 x £483).
This would wipe it out completely.
Housing Benefit if there is no UC
Once the UC has been wiped out the Housing Benefit department has to go back to an old-school, pre-UC calculation.
Old-school HB says that she needs £61.05 per week to live on.
They let her keep the first £5 per week of wages.
If she has earnings over £66.05 (£61.05 + £5.00) she has to pay towards the rent.
Her rent payment is 65% of the excess income.
The weekly equivalent of the UC drop-out figure of £483 per month is £111.46 per week.
With this wage the excess would be £45.41 (£111.46 – £66.05)
She would have to pay £29.51 (0.65 x £45.41) per week to the rent.
For your resident earning £150 the rent contribution is £54.57pw (£150-£66.05) x 0.65
Summary
Earning up to £482 per month she gets maximum HB. Earning £483 or more per month she has to pay at least £127.87 towards the rent.
If I was in her position I would make sure that while I was living in the hostel, I never earned more than £483 per month. That way I would stay on UC and get maximum HB.
Is it always like this?
No – the figures are higher for someone aged over 25:
- UC says that a single person aged 25 or over needs £334.91 each month. They drop out of UC and begin contributing to hostel rent once they earn £608.92 per month.
- The rent contribution for a single person aged 25 or over would be 65% of the weekly wage minus £82.00.
If you have Limited Capability for Work you get to keep the first £344 of your monthly wage before UC begins to reduce.
If you have children or a partner it would be more convoluted – get in touch for details.
Beware the five payday months
If you get paid weekly, then one assessment period in every three will have five paydays. Getting this extra wage might cause you to earn more than the drop-out figure for that month.
Similar problems occur with fortnightly and four-weekly paydays.