What counts as a low income household in the UK?
In the UK, a low-income household is generally defined as one where the income is at a level which is 60% below what the median household income is. The median is the point where half of the households earn more and half earn less.
This can mean that a low-income person can also be different depending on the exact circumstances of the household, such as where you live, the number of children, if any members of the households have a disability and other factors.
The exact definition and meaning of a low-income household can be different depending on its use and in which context it is used in. For example, for the purposes of qualifying for free school meals, a low-income household is one where the household is below £7,400 per year.
Each organisation or Government body may have a different criteria of what qualifies as a low-income household so it is always important to check this eligibility criteria. Our calculator has modelled lots of different support schemes and benefits so that you can see based on your income and benefit eligibility, what support schemes you may qualify for if you have a low income.
What support is there for low income families in the UK?
In the UK, there are multiple different forms and sources of support available to low-income households and families. This can both be recurring support such as national benefits, as well as short-term support such as Discretionary Housing Payments or food vouchers.
The main form of support available to low-income households is national statutory benefits. These are normally distributed by the Department for Work and Pensions (DWP). These can include:
- Universal Credit: This is a means-tested benefit which is designed to support people both on a low-income or who are out of work. Means-tested means that your eligibility and the level of support that you may be eligible for, will depend on your exact income, savings and household circumstances. This benefit replaces older ‘legacy’ benefits such as Housing Benefit, Working and Child Tax Credits, Income Support and both income-related Employment and Support Allowance and income-based Job-Seekers Allowance.
- Child Benefit: This is a tax-free payment made to families with children. It is available to all families and can be claimed for each child up to the age of 16. If an individual has an income of greater than £50,000 then this means that your tax status can be impacted.
- Council Tax Reduction/Support: This is a means-tested benefit that helps people on low-income with their council tax bills. For working-age households, each scheme will be different from council to council, with different levels of support available in different areas. For those pension age households, all schemes are the same across the country.
- Free School Meals: This is support which is available to low-income household families. It is available to children whose parents or carers receive certain benefits, such as legacy benefits like income support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, or Universal Credit providing the household income is less than £7,400 a year after tax and excluding any benefits.
- Healthy Start Vouchers: This is support which is available for low-income households and provides help with vouchers for free milk, fresh fruit and vegetables to pregnant women and families with young children who are on a low-income. For those on Universal Credit, you must be more than 10 weeks pregnant or have at least one child under 4 years old, as well your families monthly ‘take-home pay’ being less than £408 a week from employment.
These are only a few of the schemes which are available to help support low-income households. For a full picture of both what national benefits you may be eligible for, as well as other support you can complete a free benefits check using the Better Off Calculator.
What support does local councils offer to low income families?
Local councils in the UK can offer a range of support to low-income families. This can include legacy benefits for those who are working-age, as well as for those who are pension age.
- Housing Benefit for Pensioners: For those low-income households who are pensioners, you may be eligible for Housing Benefit. This is support for housing which is paid through the council and can help cover fully or partially any rental costs. This is means-tested so your eligibility will be impacted by what income and savings that you have.
- Housing Benefit for Working-Age: For those low-income households who are working-age, you may be eligible for Housing Benefit. This is the legacy benefit for housing support and most low-income households will not be able to make a new claim for this. If you are not currently claiming Housing Benefit, any claim for housing support will have to be made through Universal Credit.
- Discretionary Housing Payments: These are payments made by local councils to households who are struggling to pay their rent and may be impacted by welfare reforms such as the Local Housing Allowance (LHA) or ‘Bedroom Tax’. This is discretionary support which is paid from the council either directly to you or to your landlord. Your eligibility for this may be different depending on your local council and applications for this will likely be online.
- Free School Meals: Local Councils are responsible for providing free school meals to eligible children in their area who are from a low-income household. You may be eligible for this if you are in receipt of a means-tested benefit such as Universal Credit, Income Support, income-based JSA or income-related ESA, or Tax Credits. If you are receiving Universal Credit, then your household income after tax should be less than £7,400. You can check your eligibility for Free School Meals using the Better Off Calculator.
- Household Support Fund: Due to the ongoing Cost of Living crisis, your local council may also have funds available through the Household Support Fund. This can be available through either vouchers for energy, cash, or funding for necessary items such as a cooker. Please contact your local council to check your eligibility. Your local council may also proactively contact you.
- Council Tax Reduction/Support: Your local council may also offer a scheme to help reduce your council tax payments. If you are working-age then your eligibility for this will depend on your local council’s exact scheme. You can use the Better Off Calculator to check your eligibility for your local council’s exact scheme.
How can low-income households be identified in the UK?
Low-income households can be identified in a number of ways.
As the UK government collects data on income through a variety of means, including tax records, benefit applications and surveys. This data is often accurate and allows for organisations to identify both the household make-up of a household, as well as to help identify what a low-income household is. This also allows nations to help define low-income households for wider policy making. For example, the government might define ‘low-income’ as any household earning less than 60% of the median income in the country or their area.
This can also be used as an indicator of poverty. Low income is often seen as a key indicator of poverty, but there are other factors that can contribute to poverty as well. Low income data can be used in a combination of other research or data. This can include issues such as housing insecurity, food insecurity, or lack of access to things such as education, healthcare, or legal advice. Low-income data can provide a wider context and help organisations and researchers look at the link between low-income and other issues.
Local organisations also have further information about low-income households. Local organisations and charities often work directly with low-income households and have a detailed picture of the situation of low-income families and any common issues or needs.
Members of the public can often self-report their circumstances through things such as surveys and questionnaires. This may mean that low-income data is not fully accurate or not a full picture due to a selection of the people who would complete this.
Different organisations, or government bodies, may use different calculations and definitions of what a low-income household is. Therefore, you should check how low-income is defined by each organisation or support you are claiming for. The Better Off Calculator can show you if you are eligible for different schemes depending on what the exact definition of a low-income household is for each organisation.
The Low Income Family Tracker (LIFT) is a tool used by local authorities to generate powerful insights from their administrative datasets to identify the most vulnerable families, target support to them and track the change.
Glossary of welfare terms
- Alternative Payment Arrangements (APAs)
- Applicable Amount
- Assessment of Need
- Benefits Uprating
- Better Off Calculator (BOC)
- Child Element
- Council Tax Band
- Council Tax Benefit (CTB)
- Council Tax Reduction Scheme (CTRS/CTR/CTS)
- Department for Work and Pensions (DWP)
- Disability Benefit
- Disability Living Allowance (DLA)
- Disability Premium
- Employment and Support Allowance (ESA)
- Enhanced Disability Premium
- ESA Work-Related Activity Component
- Extended Payments
- Family Premium
- Flat Rate Non-Dependant Deduction
- Guaranteed Award
- Her Majesty's Revenue and Customs (HMRC)
- Housing Association
- Housing Benefit
- Income-Banded Scheme
- Income Support (IS)
- Jobseeker's Allowance (JSA)
- Legacy System/Benefits
- Limited Capability for Work (LCW)
- Limited Capability for Work Related Activity (LCWRA)
- Local Housing Allowance (LHA)
- Managed Migration or Move to Universal Credit
- Maximum Amount (Universal Credit)
- Minimum Income Floor (MIF)
- Ministry of Housing, Communities and Local Government (MHCLG)
- Natural Migration
- Non-Dependant Deduction
- Out-of-Work Benefits
- Personal Independence Payment (PIP)
- Severe Disability Premium (SDP)
- Taper Rate
- Two-Child Limit
- Universal Credit Assessment
- Universal Credit (UC)
- War Disablement Pensions (WDP)
- War Widow's Pensions
- Work Allowance
- Work Capability Assessment
- Work-Related Activity Group Premium
- Work-Related Activity Group (WRAG)