The Department for Work and Pensions has confirmed the income rules relating to Personal Independence Payment (PIP) and Universal Credit. Around 70,000 people are applying for PIP every month with benefits advisors believing the huge surge in claims is partly because of proposed cuts to Universal Credit.

The limited capability for work payment within Universal Credit - which pays £390 extra to those who are medically unfit to get a job - is to be scrapped and replaced with a new health element. This will only be available to those who are already receiving PIP.

But of the 2.45 million people who get limited work capability payments in Universal Credit and the equivalent in Employment and Support Allowance, only 516,000 claimants are also on PIP. This may be among the reasons for "unprecedented levels of new claims." for PIP, with the highest number applying in any quarter since the disability benefit was introduced 10 years ago.

With PIP set to act as a passport to gain access to the new Universal Credit health element, many on BirminghamLive's Cost of Living group are asking how a combined claim would work and how else the two benefits may affect each other. We've detailed all the income rules below.


Universal Credit is means-tested so the amount you receive depends on how much you have in savings and how much earnings you get. People can have up to £6,000 in savings before Universal Credit starts to be affected and up to £16,000 before they are no longer entitled to receive the benefit.

Turn2us explains that any capital you have between £6,000 and £16,000 will see your Universal Credit reduced by £4.35 for each £250, or part of £250. So if you have £6,500 in a savings account, your benefit payment will be reduced by £8.70.

Earnings also affect the amount of Universal Credit you get but you'll still be better off overall getting both wages and benefits, advisors say. Some benefits are counted as income and some aren't.

Does PIP affect Universal Credit and is it counted as income?

In the case of Personal Independence Payment, it is not treated as income so you can receive it in full on top of your Universal Credit. PIP is not means-tested and can be claimed in addition to Universal Credit without any reduction or deduction being applied to either of these benefits.

DWP guidance on GOV.UK clarifies that you can get some other benefits as well as Universal Credit at the same time. When working out your Universal Credit payment each month, there are a number of benefits that aren't taken into account at all. These include:

  • Child Benefit
  • Disability Living Allowance
  • Personal Independence Payment
  • war pensions

Some other benefits can also be received at the same time as Universal Credit but are deducted in full, £1 for £1, from your Universal Credit payment. These include:

  • Carer's Allowance
  • Incapacity Benefit
  • Maternity Allowance
  • New style Employment and Support Allowance
  • New style Jobseeker's Allowance

Universal Credit claimants who find their payment deducted by the amount they separately get in Carer's Allowance can offset that to some extent by getting Universal Credit's own Carer's Element added. It pays an extra £185.86 on top of your Universal Credit, compensating in part for the loss of the £307 that has been deducted for getting that amount of Carer's Allowance.

PIP is also not taken into account when working out if someone is affected by the benefits cap, which is a limit imposed on the total amount that can be received from the Government.

The benefit cap means that couples (with or without children) and single claimants with a child can claim a maximum of £25,323 a year (a rise of £2,323) in Greater London - equivalent to £2,110.25 a month or £486.98 a week. Single adults without children in Greater London can claim a maximum of £16,967 a year (a rise of £1,557) - equivalent to £1,413.92 a month or £326.29 a week.

Across the rest of the UK, the benefit cap is lower. Couples (with or without children) or single claimants with a child of qualifying age can claim a maximum of £22,020 a year in benefits (a rise of £2,020) - equivalent to £1,835 a month or £423.46 a week. Single adults without children can get up to £14,753 a year in benefits - equivalent to £1,229.42 a month or £283.71 a week.

Benefits taken into account for the cap are Universal Credit, Bereavement Allowance, Child Benefit, Child Tax Credit, Employment and Support Allowance, Housing Benefit, Incapacity Benefit, Income Support, Jobseeker's Allowance, Maternity Allowance, Severe Disablement Allowance, and Widowed Parent's Allowance (or Widowed Mother's Allowance or Widow's Pension if you started getting it before April 9, 2001).