Universal Credit changes coming in the next year – how they affect payments

THE government is bringing in three major changes to Universal Credit in the next year that will affect the amount claimants are paid.

The number of people in the UK claiming the benefit doubled during the pandemic from 3million in March 2020 to 6million in January this year.

Chancellor Rishi Sunak responded to the surge by introducing a £20 a week uplift for all claimants.

But this extra support and other big changes to benefit boosts are set to take place over the next year.

Here we take you through three big upcoming changes to Universal Credit and this will affect your payments.

Minimum Income Floor reinstated – August 2021
The government is planning to reintroduce the Universal Credit minimum income floor in August, ending a benefits boost for workers.

It was temporarily removed in March 2020 as part of the emergency coronavirus budget.

The suspension was to help self-employed Universal Credit claimants who would have lost income due to self-isolation or restrictions on trading in the pandemic.

Since the minimum floor income was suspended, those earning less than the minimum wage have been receiving extra benefits.

But it will be reinstated next month as the government rolls back Covid-related financial support despite the delay to easing lockdown restrictions.

According to poverty charity Turn2us, the average cut to each worker’s benefit could be around £3,200 a year.

Sara Willcocks, head of external affairs at Turn2us, said: “Self-employed people have been hit hard by the pandemic, and the suspension of the minimum income floor was a small but vital step in helping this group of workers stay afloat.

“But we must remember that the minimum income floor is just another arbitrary benefit cap that breaks the link between need and entitlement.

“Now is not the time to be cutting people’s income. We urge the government to keep the minimum income floor suspension, otherwise we risk seeing an increase in poverty this winter.”

End to the £20 uplift – October 2021
Sunak first announced the benefit uplift, which is worth £1,040 a year, to help Britain’s poorest families through the coronavirus crisis.

The increase in payments applies to all new and existing Universal Credit claimants.

The extra support was meant to be withdrawn on March 31, but Sunak extended it until the end of September in his latest Budget.

Campaign groups, such as Citizens Advice, Turn2Us and Stepchange, have been calling for the £20 uplift to be made permanent.

But this week, the minister for welfare delivery Will Quince confirmed his “expectation” is that the boost “will end once our economy has opened”.

Speaking in the House of Commons, he said estimates that the £20 cut will push thousands of families below the poverty line were “purely speculative”.

Quince said: “Projecting the impact of an individual policy on poverty levels is complex and inherently speculative.

“It is difficult to isolate the specific impact of one policy and determine its effect on how many people fall below the poverty threshold, which itself changes over time.”

This comes despite the increase being described as a “lifeline” for struggling families.

Turn2Us said the removal of uplift could see 500,000 people “pulled into poverty overnight”.

Meanwhile, almost half of adults on Universal Credit or Tax Credits are worried that the upcoming £20 cut will affect their ability to afford food, according to its research.

Of the 5million households on Universal Credit and 1million on working tax credits, 44% will struggle to pay bills.

One in three said they don’t know if they will be able to continue to pay their rent or mortgage without the uplift.

Pulling the support is expected to push 20% of claimants into debt, according to the charity.

MPs have also urged the government to continue with the extra £20 a week payment.

Universal Credit surplus earnings threshold extended – April 2022
Universal Credit claimants will continue to get the higher surplus earnings threshold of £2,500 until April 2022, Sunak confirmed in his Budget.

After this time, it will be reduced to £300.

Surplus earnings are taken into account in your next monthly assessment period for Universal Credit.

For example, if your monthly earnings are more than £2,500 over where your payment stopped – the current threshold – this becomes “surplus earnings”.

These surplus earnings are then carried forward to the following month, where they count towards your earnings.

If your regular income and surplus earnings are then still over the amount where your payment stops, your Universal Credit payment will be affected.

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