A UK universal basic income could be funded mainly by replacing the tax-free personal allowance with a cash payment, raising income tax on earnings above it, and folding in near-universal benefits such as child benefit and the state pension. Serious UK estimates of the real (net) cost range from about £28 billion to £67 billion a year, depending on how big the payment is and what it replaces. Longer term, a citizens' wealth fund paying dividends could add to or replace tax funding.
Headlines quote anything from £28 billion to over £500 billion, so the idea can look either cheap or impossible depending on what you read. Once you see how the choices work, the numbers start to make sense and you can judge any proposal for yourself.
Why do UBI cost estimates vary so much?
Two things drive almost every difference: the level of the payment, and whether the figure is a gross or a net cost.
Full Fact, the UK fact-checking charity, looked at one widely shared figure of around £504 billion for a basic income and explained that without a set payment level "it's impossible to estimate its total cost". No level, no price.
The second issue is gross versus net cost:
- Gross cost is the payment multiplied by the number of people. Pay every adult a few thousand pounds and you quickly reach hundreds of billions.
- Net cost is what actually has to be found once you allow for the fact that most working people pay some or all of the payment back through tax, and that some existing benefits are no longer needed.
Someone on a good salary receives the payment but also pays more tax, so for them it largely cancels out. The money that genuinely moves goes to people on low or no income, which is why net figures are much smaller.
How much would a UK basic income actually cost?
Here are three well-known UK estimates, each describing a different scheme.
| Study | Payment | Estimated cost |
|---|---|---|
| Widerquist and Arndt (2023) | £8,040 per adult, £4,020 per child a year | About £45bn net, roughly 2% of GDP |
| University of Bath (2017) | About £72 a week for working-age adults | £288bn extra revenue if nothing else changed |
| Compass "fast track" (2019) | £60 a week for adults 18 to 64, £40 per child, £175 for over-65s | About £28bn |
The microsimulation: about £45 billion net
Karl Widerquist and Georg Arndt, writing in the International Journal of Microsimulation, modelled a roughly poverty-level basic income using 2019/20 data, with a 50% marginal tax rate on people who come out ahead. They put the gross cost at £472 billion, but the net cost at about £45 billion a year once people's own tax contributions and replaced benefits are counted. In their model, the share of people below the official relative poverty line fell from 17.9% to 5.0%. An earlier version of their work estimated £67 billion.
The University of Bath study: the cost of going all in
A 2017 working paper by Dr Luke Martinelli at the University of Bath's Institute for Policy Research found that a basic income at existing benefit levels would need £288 billion in extra revenue without other changes. To make it pay for itself, major benefits and the state pension would go, the personal allowance and National Insurance thresholds would be removed, and income tax would rise by 4 percentage points across all bands, with a further 4 points to protect disabled people. The paper concluded that keeping means-tested benefits alongside a basic income gave a better balance, a useful pointer for anyone designing a scheme.
The Compass "fast track": about £28 billion
In 2019, economists Stewart Lansley and Howard Reed proposed a modest starter scheme for the think tank Compass. Child benefit and the state pension would be replaced by the new payments, while means-tested benefits would stay. They put the cost at about £28 billion and recommended a pilot first.
Where could the money for UBI come from?
Most proposals combine several sources.
Reshaping income tax and allowances
The most common route is to turn the tax-free personal allowance into a cash payment. Today the allowance is worth most to people who earn enough to use all of it. A flat payment gives everyone the same amount, which is more generous at the bottom. Every model above pairs this with higher tax rates on income above the payment.
Folding in existing benefits
Child benefit and the state pension are already close to universal, so they are the easiest to absorb. Housing and disability support are harder because needs vary so much, which is why the Bath and Compass work both point towards keeping those payments.
Building a citizens' wealth fund
Instead of paying for everything from this year's taxes, a country can build a fund and pay dividends from its returns. Alaska's Permanent Fund has paid residents an annual dividend since 1982. The 2026 payment is $1,200, a $1,000 dividend plus a $200 energy relief payment, costing more than $800 million in total, according to Alaska's News Source. The amount moves with politics and markets: it was $1,000 in 2025 and $1,702 in 2024, so a UK version would need rules that keep payments steady.
In the UK, the IPPR's 2018 report Our Common Wealth proposed a Citizens' Wealth Fund built from reformed wealth taxes, a small levy of company shares, asset sales and the Crown Estate. It estimated the fund could reach £186 billion by 2029/30 and pay about £10,000 to every 25-year-old from 2030.
Taxing wealth, land or pollution
Other ideas shift the burden from earnings to assets: wealth taxes, land value taxes, or carbon taxes returned as a per-person dividend. Each has its own design questions, so check the latest analysis from bodies such as the Institute for Fiscal Studies before relying on any single revenue figure.
Has the UK tested basic income yet?
The closest UK test is the Welsh Government's Basic Income for Care Leavers pilot. From July 2022, young people leaving care were offered £1,600 a month before tax (£1,280 after) for two years, and 97% of those eligible, 644 people, took part.
The evaluation, led by Cardiff University's CASCADE centre, reported in March 2025 that the payment generally covered living costs, money skills improved, and many recipients saved for things like driving lessons, a car or university. Recipients described less anxiety and more control over housing and career choices. Some still found it hard to get work, which gives future schemes something concrete to plan support around. The evaluation runs to 2027 to track longer-term effects. For more on what pilots have found, see our article on what the UBI pilots actually found.
Frequently asked questions
How much would universal basic income cost the UK?
It depends on the payment level and what it replaces. A peer-reviewed study by Widerquist and Arndt put the net cost of a roughly poverty-level scheme at about £45 billion a year, around 2% of GDP. A smaller Compass starter scheme was costed at about £28 billion.
Would UBI mean higher taxes?
Most UK models involve higher income tax on earnings above the payment, but many people would receive more in basic income than they pay in extra tax. The University of Bath found a fully self-funding scheme would need a 4 percentage point rise across all bands, with a further 4 points to protect disabled people.
Could a wealth fund pay for basic income?
A wealth fund can pay regular dividends, as Alaska's Permanent Fund has done since 1982, but it takes years to build. The IPPR suggested a UK Citizens' Wealth Fund could reach £186 billion by 2029/30, enough for a one-off £10,000 payment to each 25-year-old.
Would UBI replace all benefits?
Most current UK proposals would not. Universal payments such as child benefit and the state pension are easiest to fold in, while housing and disability support usually stay because people's needs differ so much.
Where MeWeBe fits
MeWeBe is a small, voluntary experiment with the wealth-fund idea. Startups in our network get help building, free or for a small equity share, and pledge a share of future profits to a community pool. Members join free and earn MWB coins for taking part; coins are virtual points with no cash value. Distributions from the pool are a goal on our roadmap, not a promise, and only start once startups make sustained profits. You can see where the pool stands on how it works, and our guide to what UBI is covers the basics.