DWP summary of changes to the Universal Credit taper rate and Work Allowances

Tori_Scope

In case you didn't hear, the 2021 Autumn Budget and Spending Review (gov.uk) was announced yesterday. 

In yesterday's review, the Chancellor announced some changes to the Universal Credit taper rate and Work Allowances.

We were sent the following summary, which I hope will help you to understand what this might mean for you. 

Universal Credit taper rate
The taper rate means that if people increase their earnings, for example by working more hours, their Universal Credit is gradually withdrawn. Currently the taper rate is 63p, meaning for every £1 a person earns after tax their Universal Credit is reduced by 63p. To make sure work pays and people are supported to thrive and achieve their potential, the Government is cutting this taper rate by 8p, from 63p for 55p, ensuring more money in people’s pockets.

Universal Credit Work Allowance
Some households can earn a set amount before the taper rate kicks in. This is called the Work Allowance, and is generally for households on Universal Credit who are in work and either looking after a child or have a household member with limited capability for work.

Work Allowances are currently set at £293 a month if the household receives housing support, or £515 if they do not receive housing support. These are both being increased by £500 per year.

Both of these changes will be implemented from December 2021, and together they will benefit 1.9 million households who will, on average keep around an extra £1,000 a year. The changes apply across Great Britain, and the Northern Ireland Executive will be funded to match them.


Other key measures to help people into work and tackle the cost of living

• The government is providing targeted additional support for groups which may need extra help to get into work and progress. This includes workers who have left the furlough scheme and are making a Universal Credit claim who will be prioritised through the Job Finding Support scheme, and older workers who will benefit from additional support to return to, or remain in work.

• Over the winter the £500m Household Support Fund will help vulnerable households with the cost of essentials such as food, clothing and utilities – Local Authorities in England will be allocated up to £421m of this funding and will ensure it reaches those who need it most; with 50% ring-fenced for households with children. The additional funding will be allocated to the devolved administrations in the usual way.

• Increasing the National Living Wage from £8.90 per hour to £9.50 per hour for over 23s

• Young people and apprentices will also see their wages boosted as the National Minimum Wage for people aged 21-22 goes up to £9.18 an hour and the Apprentice Rate increases to £4.81 an hour.

• Raising the personal tax allowance to £12,570 from April, meaning workers keep more of the money they earn

• Maintaining the energy price cap, which since 2019 has saved 15 million households £100 a year on average

Supporting disabled people into work
And to support disabled people into work, the government confirmed as part of the spending review that it is providing specialised disability employment support worth over £1.1bn over the next three years, including an additional £156m over the SR period for health and disability support with a focus on additional work coaches.

This is alongside the Work and Health Programme which will continue to provide personal support to disabled people to find jobs that match their employment and health needs, and the Access to Work scheme which will continue to help cover the costs of workplace adaptations, special equipment and travel.
 

What do you think of the announcement?

calcotti

Love the phrase "To make sure work pays and people are supported to thrive and achieve their potential," There was me thinking it was to help them pay their bills.

As noted in many places doesn't help households who, for whatever reason, do not have anybody in work.