Money Wellness
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calendar icon20 Jan 2023

Can you get universal credit on a zero-hours contract?

Over a million people in the UK are on a zero-hours contract. If you are one of them, you might be looking for information about whether you can get any financial help. Or maybe you’re already a universal credit claimant and want to know how a zero-hours contract would affect your claim.

Either way, in today’s post we’re giving you the basics about universal credit and zero-hours contracts. We will also signpost you to sources of further help and information. And remember, if you’re struggling with debt for whatever reason, we can help. Head to our website at any time to find out more.

What is a zero-hours contract?

As the name suggests, a zero-hours contract is an employment contract which doesn't guarantee a minimum number of working hours.

As a result, this kind of contract very often involves working different hours each week. This means your earnings vary week to week too.

This can make it hard to manage a household budget, particularly if you’re paying your bills monthly instead of weekly. In practice, you might generally work the same number of hours each week. But there’s always the risk that your hours will drop unexpectedly. So you could go very suddenly from having almost a full time wage to having no pay.

As a result, some people with zero-hours contracts may want to supplement their income with benefits such as universal credit.

What is universal credit?

Universal credit is gradually replacing all other income-based benefits. These include:

  • tax credits
  • income-related JSA and ESA
  • Income support
  • Housing benefit

If you receive any of these benefits, you may be switched to universal credit in the future.

If you don’t claim any benefits, you may be eligible for universal credit if you have little or no income. Your eligibility depends on your circumstances - have a look at the government’s website for more details on who can get universal credit.

The amount of universal credit you get depends on a number of factors, including:

  • how many children you have
  • your housing costs
  • whether you or anyone in your household is disabled

The benefit cap may also affect the amount you get.

How a zero-hours contract can affect your claim for universal credit

It's possible to claim universal credit while working. And unlike some other benefits, there isn’t a limit to the number of hours you can work.

If you’re working, the amount of universal credit you get will vary according to how much you earn (and your partner’s earnings too, if applicable). Your payment is based on your earnings in each ‘assessment period’, which is usually a month - so everything you earn in that month will be taken into account.

In general, your universal credit payment goes down by 63p for every £1 you earn. But if you’re entitled to a ‘work allowance’, because you have dependent children and/or an illness or disability, there is a threshold before this taper is applied.

If you’re on a zero-hours contract or if your hours otherwise vary, the good news is that, as long as you don’t earn too much to be entitled to any universal credit, your payments will cover the rise and fall in your income.

And as long as you pay tax through PAYE, you don’t need to report your income to the job centre every week or month. The Department for Work and Pensions will get this information from HM Revenue and Customs and will automatically adjust your universal credit payments.

The bad news is that if, in any one assessment period, you earn too much to claim universal credit, your entire claim will be stopped. So if your earnings go down again, you'll need to make a new universal credit claim online.

Universal credit scams

There are scammers out there who may offer to make a claim for universal credit and apply for an advance payment on your behalf. They will keep some of this advance payment for themselves, but you will have to repay all of it once your universal credit claim begins, so you’ll end up out of pocket.

Or the scammers may simply offer you a ‘government loan’ and make a universal credit claim on your behalf, without telling you that’s what they’re doing. This claim could end up being treated as benefit fraud.

Whatever reason you’re given, don’t give out your ID and bank details to anyone who approaches you in this way. If you've been targeted, even if you’ve not become a victim, you can report it to Action Fraud on 0300 123 2040 or using their online reporting tool; or on the FCA Scam Smart website.

I'm on a zero-hours contract and I want to try and get universal credit - what do I do now?

To find out whether you’d be eligible for universal credit and how much you could get, use a government recommended benefits calculator. You can also visit the government’s website for information on how to make a universal credit claim, including what you’ll need.

If you’re struggling with debt repayments on top of your essential bills because you’re on a zero hours contract, it could be a sign that you’re starting to lose control of your finances. Your essential bills should always come first and if you’re having trouble affording these because of your income and your unsecured debts, you should seek help. Take a look at our debt solutions for an idea of the kind of help that’s available.


Avatar of Rebecca Routledge

Rebecca Routledge

A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.

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