zero hours contract taxation

zarazata

I used to work in customer service field with a certain wage,but decided to switch to social care field to work in live-in basis as the payment is attractive. I got a job and made a call to Universal credit to report that I started to work. I was told that I need to send a copy of my first payment, and I would require to pay 0.63 pence from each pound I earned. Definitely it makes less than I was receiving in customer service field. How is it possible? Looks like never get a chance to crawl out from poverty. Would someone with better knowledgeable able to explain situation and what is the best way to avoid this robbery?

chrisbur

zarazata wrote: »

I used to work in customer service field with a certain wage,but decided to switch to social care field to work in live-in basis as the payment is attractive. I got a job and made a call to Universal credit to report that I started to work. I was told that I need to send a copy of my first payment, and I would require to pay 0.63 pence from each pound I earned. Definitely it makes less than I was receiving in customer service field. How is it possible? Looks like never get a chance to crawl out from poverty. Would someone with better knowledgeable able to explain situation and what is the best way to avoid this robbery?

Universal credit is a payment made to you to increase the amount of money you get from working. The lower your earnings the higher the amount of UC and so also the higher your earnings the lower the UC you get.
As your net pay increases (ie earnings after tax NI and pension have been deducted) your UC is reduced by 63 pence for each pound you get. In other words each pound increase in your net pay makes you 37 pence richer. This continues until your earnings are above the level for the payment of UC. In this way UC tapers off as earnings increase rather than suddenly stopping.
Details are here....
https://www.entitledto.co.uk/help/Earnings-taper-Universal-Credit

agrinnall

Do you both mean 63p rather than 0.63p? Because the latter is an insignificant amount that would have little impact on net pay.

chrisbur

agrinnall wrote: »

Do you both mean 63p rather than 0.63p? Because the latter is an insignificant amount that would have little impact on net pay.

Many thanks for clarifying this I like I am sure most people on this forum thought that the OP was indeed referring to an amount just over a half-penny. Your keen eye has avoided a great deal of confusion.

I have amended my post to correct.

zarazata

:rotfl:I meant 63 pence

badmemory

Are you sure they don't think this is an extra job? As it should be 63p of any increase in your pay.

sheramber

The 63 p per pound is worked out on your net income and that amount is deducted from your Universal Credit payment- not from your net income.

So you keep your net income and lose an amount from your Universal Credit payment.

Depending on your income your Universal credit payment could eventually be nil.