UC get your takehome pay from HMRC verified by your employer(s). Night Out money - will be included towards any 63p/£ deductions once you go beyond your personal earnings threshold calculated on your household status.
This means that taxes, NICs, and pension contribution deductions - have the effect of pushing the UC up a bit, whilst “extras” on the top line such as overtime or night out money will push the bottom line up a bit, and thereby reduce the UC entitlement.
The largest aspect of UC “earnings allowance” - is for the child element, which boost the amount you can earn before the savage claw back of UC. It’s over £200 per child, which means if you have three kids and a wife now out of work - you’re likely to actually do better than the 80% pay involved on furlough, had you got that instead. Each extra child is worth more than half of the entire couples allowance, meaning that kids count for more than the adults do in the claim.
You mentioned kidS in the plural in original post, so I reckon you’re looking at the first grand a month of takehome earnings being left alone, and the basic allowance per month for the whole family being around the £800pm mark less 63p in the pound for anything above and beyond the allowances set by applying as a couple and applying with x kids factored in.
“Couple” rather than single on the application then,
Kids rather than no kids,
Paying tax, pension, and any other deductions on your wage
ALL have the effect of widening the arbitrage channel where you’re actually best off doing a certain number of hours - upto the point where the 63p/£ clawback kicks in.
Tax credits used to work in a similar manner, but the threshold was so low, that if you did more than 30 hours per week @ minimum wages - you ended up getting clawed back straight away.
Thus, UC would seem to be better than Tax Credits, which makes sense - bearing in mind that UC is supposed to be replacing tax credits.
The new system is “job above minimum wage friendly” one might say.
If I were to be so bold as to assume you have 2 kids, then the calculation should be as follows:
Basic Allowance:
1 x £594.04 for you and your missus as a couple applying.
1 x £277.08 for your first child
1 x £235.83 for your second child
TOTAL - £1106.95 per month payment of UC
LESS the following:
63p in the pound reduced for all your earnings above £512 per month if you don’t put in a claim for Rent, Mortgage Interest, or Council Tax grant.
So, if you earned £1512 takehome pay next month for example, you’d have 63p in the pound taken off the excess above £512, which means £630 would be taken off your starting £1106.95 monthly payment, leaving you and your missus with a £476.95 payment for that previous month paid in arrears, which is essentially a payment aimed at your missus - because she no longer has a job, and yourself - because you’re no longer earning over £2000 a month yourself any more.
Each month - your earnings for that month gets taken automatically from your employer and HMRC to calculate what your new rate is left over for you and the wife.
Since £1512 per month is well above the threshold for starting to pay income tax and National Insurance, you need to be careful before considering doing overtime:
If you earned an extra £100 takehome in overtime in any month for instance, you’d be paying over £12 of it in National Insurance, and over £20 in tax, and you’d have £63 taken off your next month’s UC payment.
That means you’d lose 95% of any extra earnings you get - once you go beyond the threshold, which has that bar set rather low @ the first £512 per month, don’t forget.
The same applies if your wife gets another job, since the £512 earnings allowance - is for you BOTH.
I beleive the reason that UC is considered “unpopular” and “Another Tory Hate Crime against the masses” to date - is simply because you’re now better off taking a lower paid job than you are either cramming the hours, or sitting at home doing bugger-all on what used to be called “Unemployment Benefit”. If anything, one might call this “New” Universal Credit thing “UNDERemployment benefit”, I reckon!
Imagine these workshy types who were getting a payment for never having to work at all, now being told that if you don’t take a low-paid job - your benefits will now be reduced after a while…
“Less is More” now.
There is a real opportunity here to take a look at your family’s work-life balance at this point - eh?
There’s other stuff that you can claim for, like free school dinners, child care etc. - but that isn’t money in your pocket as such.
The “work allowance threshold” is much LOWER if you put in any claim for Rent, Council Tax Benefit, etc.
I think the idea of this credit is to smooth-out any drop in income that has happened to your household as a whole.
If you and the wife were both unemployed outright, you’d only be getting the income of £1106.95 in this example, with no deductions.
Not very good compared to £1512 takehome earnings PLUS £476.95 UC on top - is it?
FFS you’re back up to just shy of £2k per month takehome earnings again, but at the cost of your wife’s job…
The pressure is thus off you because you already have a job. There’s no need to put in “overtime” as far as I understand it.
Your missus meanwhile - can hold out for a better-paid job, so no need for her to go cleaning, or work in a call center, or something else soul-destroying, as you’ve put in a joint claim, which is based more around your low income, rather than her currently zero income. If you’d applied seperately, you wouldn’t have got much UC at all, and your wife would only get it on the understanding that she takes the first job that comes along… 