WORKING Brits on Universal Credit will keep more of what they earn after the government announced a change to rules for the benefit.
Chancellor Rishi Sunak said in the Budget that the taper rate will be reduced and work allowances increased for Universal Credit from December this year.
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The taper rate reduces the amount you get by 63p for every £1 earned over a certain amount – but that will be lowered to 55p.
The work allowance is an amount that some people can get before this taper rate kicks in and it will rise by £500 a year.
These changes mean those in work and on Universal Credit will be able to keep more of what they earn.
We spoke to one single mum who will be around £400 a year better off with the rule change.
But the exact amount people will get from the rule change depends on their circumstances.
Calculations by the Joseph Rowntree Foundation show the gains some can expect, assuming minimum wage pay which is also rising.
For a single parent with a child aged five working 16 hours a week, the taper rate and work allowance changes would make them £8 a week better off – or £96 a year.
A couple where one works full-time, with a five- and seven-year-old, will be better off by £19 a week – £228 a year.
And a single parent with a child aged five working full-time will better off by the same amount.
Meanwhile a family of four with young kids where one parent works full-time and the other works 16 hours a week will be better off by £31 a week – or £372 a year.
However the charity also notes that the planned rise in national insurance in April next year, along with rising living costs and energy prices could eat up this extra money.
The exact amount you might benefit from the change will depend on how much you earn, if you have kids and if you have help with your housing, among other things.
Entitledto.co.uk’s benefits calculator has now been updated with the new amounts so it can help you understand how much you could get.
How does the work allowance affect me?
You get a work allowance if you (or your partner) are responsible for a child or have limited capability for work.
How much it is depends on whether you claim the Housing Costs element of Universal Credit.
The monthly work allowance is set at £293 if your Universal Credit includes Housing Support, and £515 if it doesn’t.
The work allowance is the amount you can earn before the taper rate kicks in.
So you’ll keep all of your earnings up to these amounts.
From December 1 these amounts will increase by around £42, so the new rates are expected to be £335 and £557 a month.
If you’re not eligible for the work allowance the taper rate will kick in as soon as you start earning.
How does the taper rate affect me?
The taper rate reduces the amount you get by 63p in every £1 over the work allowance, if eligible for one.
But with the reduction to 55p from December 1, working Brits will keep an extra 8p for every £1 they earn
The taper rate is applied to your Universal Credit payments automatically and you should be able to see the deductions on your account.
The government said that both changes will directly benefit 1.9million households.
The taper rate has put thousands of claimants off applying for better paid jobs or taking on more hours.
The Sun has been calling for the government to increase the allowance and reduce the taper rate, as part of our Make Universal Credit Work campaign.
Who won’t be affected by the Universal Credit changes?
Unfortunately those on Universal Credit and not in work will not benefit from the changes to the benefit.
Thomas Lawson, chief executive of charity Turn2us said the changes are “welcome steps” for people on low incomes to keep more of their hard-earned wages.
“Yet for many people this will not make up for the £20 a week cut made earlier this month,” he said.
“Those who will gain from this change the most are working full time. For single parents and others with caring responsibilities the benefits will be smaller.
“And for people unable to work at all, this will do nothing to help with the rising cost of living.”
Budget: Massive Universal Credit shake-up so 2million can keep an extra £1,000 a year
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