What Universal Credit changes could be in the Budget 2021?

CHANCELLOR Rishi Sunak will today reveal what changes will be made to Universal Credit in his 2021 budget.

What is he expected to announce? Here's all you need to know…

What are the Universal Credit changes in Budget 2021? 

Taper Rate

In a win for The Sun's Make Universal Credit Work campaign, the Treasury is rumoured to make a change to UC that allows workers to keep more of the money they earn and incentivise people to take on extra work.

The government has been under pressure from charities and organisations to cut the punishing taper rate and allow claimants to keep more of their cash.

It was the DWP's main spending review ask – to cut the taper rate down to 60p.

This will help to soften the blow for the lowest paid ahead of a tough winter while families are being battered by soaring energy, food and fuel costs.

Should the taper rate be slashed, 1.7million households will benefit and be better off, according to The Joseph Rowntree Foundation.

It will also help to give claimants more support after the £20 weekly uplift to Universal Credit payments was slashed earlier this month.

The government introduced a £20 a week raise to help claimants through the coronavirus pandemic, but it was scrapped on October 6.

Joseph Rowntree Foundation estimated that 5.5million families lost out on the axed £1,000 boost a year, with £440million in total wiped off monthly incomes.

What is the taper rate?

The Universal Credit taper rate currently taxes Brits 63p in the pound on anything they earn over their base level of benefits.

It kicks in once claimants are earning above their Work Allowance – which is the amount of money you can earn before your Universal Credit payments are subject to being cut under the taper rate.

So you'll lose 63p of your maximum Universal Credit award payment for every £1 you earn over your Work Allowance.

Your Work Allowance if affected by 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.

If you're subject to the taper rate, then your payments will be deducted automatically.

The taper rate puts thousands of claimants off applying for better paid jobs or taking on more hours.

Minimum wage

Mr Sunak is expected to boost millions of workers' pay packets in the Budget tomorrow.

He is set to increase the minimum wage from the current £8.91 to £9.50 an hour.

It will come into force from April 1 next year, and works out at an extra £1,073.80 per year.

This is roughly the same amount of money that Brits claiming Universal Credit were receiving under the £20 a week uplift which was axed earlier this month.

He also won't increase fuel duty as record breaking fuel prices have forced him to ditch a 2.84p rise.

Plus, Mr Sunak will unfreeze public sector pay in a boost to frontline workers, NHS staff, teachers and civil servants.

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