On Saturday, April 6, the Universal Credit Work Allowance will increase by £1,000 a year. The Universal Credit Work Allowance is the amount people can earn before benefits start to decrease. For every £1 you work above the work allowance, your Universal Credit payment decreases by 63p.
This decline based on wages earned is called the earnings taper.
However, the Department for Work and Pensions (DWP) will raise the allowance from Saturday, April 6.
This means that people can earn more money before finding their Universal Credit payments decreased.
The Government says that due to the increase, about 2.4 million households will get to keep an extra £630 each year.
What does this mean?
The work allowance limit has two different rates depending on whether the Government help with your housing costs.
According to the rules before April 6, the lower work allowance for people claiming housing benefit was £198.
That will rise to £287 which means you can earn an extra £89 a month before your Universal Credit payments are reduced.
For families who claim the higher allowance – which means they do not claim housing benefit – the allowance is rising from £409 to £503.
As a result of this increase, those receiving payments can earn £94 more a month before benefits are cut.
The work allowance applies to single people, couples with dependent children, or those with limited capability to work.
Workers who do not have children who depend on them do not qualify, which means every penny they earn is subject to the taper rate.
What is Universal Credit?
The Universal Credit system replaces multiple payments for things such as working tax credit, child tax credit, income-based jobseeker’s allowance, income support, income-related employment and support allowance, housing benefit, with a single monthly payment.
Not everyone is on Universal Credit, as it is slowly being phased in across the UK.
There has been some criticism for delayed payments, running over budget and in some cases causing recipients to be worse off than before the system.
Secretary for State for the Department for Work and Pensions Amber Rudd has said she was “absolutely clear there were challenges with the initial roll-out” of the benefit and that the difficulty in accessing money was “one of the causes” of the rise.
However, she said the Government had made changes to combat food insecurity.