Tens of thousands of low income households will get a cash boost as higher Universal Credit payments land in bank accounts for the first time.
As announced in the Autumn Budget, the taper rate – the amount that a person’s Universal Credit is reduced by as they earn more – has dropped from 63% to 55%. Simultaneously, work allowances, the amount eligible claimants can earn before their Universal Credit is reduced, have increased by £500 per year.
Taken together the move will see, in total, almost 2 million of the lowest paid working families better off each year by an average of £1,000.
The changes ultimately mean people will keep more of what they earn, representing an effective tax cut worth £2.2billion for the lowest earners. For example, a single mother of 2, working a full-time job on the National Living Wage and living in rented accommodation, will see her take-home income increase by £1,200 on an annual basis.
Meanwhile, a couple with 2 children, renting their home, where 1 partner works full time at the National Living Wage and the other works 16 hours a week earning the same, will be £1,800 per year better off.
The Department for Work and Pensions has introduced the changes as quickly as possible, passing regulations last week to secure the higher payments for the lowest earners in time for Christmas.
Prime Minister Boris Johnson has said:
“It’s right that we support hard-working families, and this change will help some of the country’s lowest income families keep more of their money.
Article continues below this advertisement “Together with the increase in the minimum wage and our investments in skills and training, it shows this is a government committed to making work pay.”
Work and Pensions Secretary, Therese Coffey, adds:
“Tens of thousands of the lowest earners will see a boost to their bank accounts today following changes to Universal Credit, meaning that people can keep more of what they earn to help with the cost of living.
“We introduced this change earlier than planned which will see up to 500,000 more households benefitting before Christmas.”
Santa comes early this December then. He is real after all.
Yes this sounds good, but why doesn’t Boris SCRAP ZERO HOUR CONTRACTS that would help a great deal.
Some people are never happy
because zero hours contracts work well for some people
not sure why you vote that down – I know someone who has about four different zero hours contracts on the go at once, with four different companies – this person lets them know when they are available and when they are not available – puts control into the hands of the employee and they work when they want to.
They have plenty of variety and plenty of hours – they just make themselves unavailable when they want an annual leave breaks or days off.