Christmas jobs and Universal Credit: Will seasonal work affect your benefits?

Thousands of people are set to take on temporary work in the run-up to December as retailers, delivery firms and warehouses ramp up seasonal recruitment.

But if you're claiming benefits, you may be wondering whether earning extra money could affect your payments.

Taking a Christmas job does not automatically mean you'll lose your benefits instead the impact will depend on which benefits you receive and how much you earn.

There is no fixed limit on the number of hours you can work and still receive Universal Credit.

However, your payment will usually reduce as your earnings increase.

Can you take a Christmas job while claiming Universal Credit?

You do not automatically lose your benefits because you start working, and you do not have to work a particular number of hours to qualify for Universal Credit.

Instead, the Department for Work and Pensions (DWP) calculates your Universal Credit payment using your household circumstances and earnings during each monthly assessment period.

If your earnings increase, your Universal Credit will normally decrease. If your earnings fall again when your temporary contract ends, your payment may increase, provided you remain eligible.

This means a Christmas job could help you earn extra money while continuing to receive some Universal Credit.

However, the precise effect will depend on how much you earn, whether you have a work allowance and whether your circumstances change.

How much Universal Credit will you lose if you earn extra money?

For most claimants employed who do not have a 'work allowance', Universal Credit is reduced by 55p for every £1 of earnings.

This is known as the earnings taper.

It means you do not normally lose your entire Universal Credit payment as soon as you start working. Instead, the amount you receive reduces as your earnings rise.

For example, if you earn an extra £500 in take-home pay during a monthly assessment period and do not have a work allowance, your Universal Credit would generally fall by £275.

You would still have £225 more from your combined wages and Universal Credit than you would have received without those additional earnings, before accounting for any work-related costs or other changes to your finances.

Can you earn some money before your Universal Credit is reduced?

If you qualify for a work allowance which is the amount certain Universal Credit claimants can earn before the 55% taper starts to reduce their payment.

You may qualify if you or your partner are responsible for a young child or have a health condition or disability that affects your ability to work and be able to earn up to £710.

You can also earn a certain amount if you get help with housing through Universal Credit, earning up to £427 a month before your payment starts to reduce.

Could your Christmas pay date affect your Universal Credit?

Yes and this is important if you are taking temporary work with weekly or fortnightly pay.

Universal Credit is calculated monthly, using the earnings recorded during your assessment period. This means the timing of your wages can affect how much you receive in a particular month.

If you are paid weekly, every two weeks or every four weeks, there may be an assessment period in which you receive more paydays than usual.

For example, someone who is paid weekly could receive five wage payments in one assessment period rather than four. This could make their earnings appear higher for that month and reduce their Universal Credit payment, potentially to zero.

The same issue can arise if a temporary employer pays wages earlier than usual because of Christmas bank holidays.

Check your assessment period and expected payday before relying on a particular Universal Credit amount to cover your bills.

If your payment looks unexpectedly low, check your online statement and contact Universal Credit through your journal if you think the earnings information or calculation is wrong.

Do you need to tell Universal Credit if you get a Christmas job?

Most employees do not need to report their monthly wages themselves because their employer normally reports earnings through the PAYE system.

If you're self employed you will need to report earnings.

anyone claiming Universal Credit should report changes in your circumstances, including finding or finishing a job, through your online Universal Credit account.

This is separate from your employer reporting your wages.

Keep copies of your contract, payslips and any information about when your temporary job starts and ends. These could help if you need to query a payment.

What happens to Universal Credit when a Christmas job ends?

If your temporary job finishes in January, your earnings may fall or stop. Your Universal Credit could then increase again, depending on your circumstances and any other income you receive.

You should report the end of your job through your Universal Credit account and check your payments and statements.

If your Universal Credit stopped because your earnings were too high, you may not need to make a completely new claim if you become eligible again soon afterwards.

Payments can automatically restart if it has been six months or less since your last Universal Credit payment and your circumstances mean you qualify again. If more than six months have passed, you will generally need to make a new claim.