Background Addressing poverty through taxation or welfare policies is likely important for public mental health; however, few studies assess poverty's effects using causal epidemiology. We estimated the effect of poverty on mental health. Methods We used data on working-age adults (25–64 years) from nine waves of the UK Household Longitudinal Survey (2009–19; n = 45 497/observations = 202 207 following multiple imputation). We defined poverty as a household equivalized income <60% median, and the outcome likely common mental disorder (CMD) as a General Health Questionnaire-12 score ≥4. We used double-robust marginal structural modelling with inverse probability of treatment weights to generate absolute and relative effects. Supplementary analyses separated transitions into/out of poverty, and stratified by gender, education, and age. We quantified potential impact through population attributable fractions (PAFs) with bootstrapped standard errors. Results Good balance of confounders was achieved between exposure groups, with 45 830 observations (22.65%) reporting poverty. The absolute effect of poverty on CMD prevalence was 2.15% [%-point change; 95% confidence interval (CI) 1.45, 2.84]; prevalence in those unexposed was 20.59% (95% CI 20.29%, 20.88%), and the odds ratio was 1.17 (95% CI 1.12, 1.24). There was a larger absolute effect for transitions into poverty [2.46% (95% CI 1.56, 3.36)] than transitions out of poverty [–1.49% (95% CI –2.46, –0.53)]. Effects were also slightly larger in women than men [2.34% (95% CI 1.41, 3.26) versus 1.73% (95% CI 0.72, 2.74)]. The PAF for moving into poverty was 6.34% (95% CI 4.23, 8.45). Conclusions PAFs derived from our causal estimates suggest moves into poverty account for just over 6% of the burden of CMD in the UK working-age population, with larger effects in women. [ABSTRACT FROM AUTHOR]