Important changes to Universal Credit will benefit some working families
At the most recent Budget on 27 October 2021 Chancellor Rishi Sunak announced some significant and welcome changes to Universal Credit which will benefit some working families. These changes took effect on 24 November 2021 across the UK, including in Northern Ireland.
What are the key changes?
There are two changes to the way in which the Universal Credit entitlement is calculated:
- Increase of £500 per year to the Universal Credit Work Allowance: This increases the amount that households with children, or a household member with limited capability for work, can earn before their Universal Credit award begins to be reduced.
- Reduction in the Universal Credit taper rate from 63% to 55%: This means Universal Credit claimants who are working will be able to keep an additional 8p for every £1 of net income they earn. At present, workers receiving Universal Credit lose 63p in benefits for every extra pound they earn.
What do these changes mean in practical terms for families?
Essentially, the greater a family’s earned income – money earned through work or employment – the more these changes will increase your Universal credit, as illustrated in the case studies below.
Case study one
Elaine is a single parent, with one child, working 16 hours per week. She has childcare costs of £80 a week and is paying rent. Elaine earns £142 a week. Her Universal Credit entitlement before these changes was £1,322 per calendar month. This has now increased to £1,371 per month. Elaine’s family is now better off by £49 per month.
Case Study two
John and Joanne both work, and have three children. They own their own home, and have no childcare costs. Their joint income is £31,500 per annum. Their Universal Credit entitlement before these changes was £70 per calendar month. This has now increased to £260 per month. John and Joanne’s family is now better off by £190 per month.
I was told I was not entitled to Universal Credit before, should I have this checked again?
Yes, these changes mark an improvement to the Universal Credit system and are a positive step for working families, allowing workers to keep more of what they earn.
At any time, a change in circumstances could result in a family becoming eligible for financial support. Some families who were previously not entitled to Universal Credit may now be entitled due to the changes that have been implemented. We would encourage every family to contact us regularly to ensure you are not missing out on any entitlements.
How can I find out more?
We would encourage anyone wishing to find out what these changes mean for them, or find out about any financial support they may be entitled to, to contact our Family Benefits Advice Service for free, impartial and confidential advice on 028 9267 8200 or email hello@employersforchildcare.org.
