The Department for Work and Pensions has announced that Universal Credit is expected to see a 1.7% increase next year, affecting more than six million people in the UK. The rise in benefit payments, set to take effect in April, is in accordance with the rate of inflation disclosed this week to be 1.7%. Chancellor Rachel Reeves is anticipated to confirm this uplift in her Autumn Budget on October 30.
Universal Credit, which is gradually replacing six older legacy benefits, consists of a standard allowance, which is the fundamental amount paid before any additional elements such as having children or being unable to work due to illness are taken into account. Deductions may be applied if individuals have savings or owe money to the Department for Work and Pensions (DWP). For employed individuals, there is a taper rate in place, reducing the maximum Universal Credit payment as earnings increase.
The Universal Credit system operates with a taper rate set at 55%, meaning that for every pound earned, 55 pence is subtracted from the maximum Universal Credit payout. Claimants are also entitled to a “work allowance,” allowing them to earn a predetermined sum before reductions to Universal Credit come into effect. Moreover, there is an element for childcare costs within the scheme, enabling working parents to recover up to 85% of qualifying childcare expenses.
Here are the projected increments for Universal Credit starting from April:
– Standard allowance for single under 25: £311.68 a month to £316.98 a month
– Standard allowance for single 25 or over: £393.45 a month to £400.14 a month
– Standard allowance for joint claimants both under 25: £489.23 a month to £497.55 a month
– Standard allowance for joint claimants, one or both 25 or over: £617.60 a month to £628.10 a month
– Various increases for child element, disabled child element, limited capability for work, carer element, work allowance, and childcare costs element.
The forthcoming rise in Universal Credit is aimed at supporting individuals and families who rely on these benefits for their financial stability. The adjustments in benefit payments aim to assist claimants in meeting their essential needs and improving their overall financial well-being. It is crucial for recipients to stay informed about these changes to ensure they are receiving the correct amount of support they are entitled to.