Tens of thousands of low-income households will get a cash boost following Universal Credit changes.
In the Autumn Budget, the taper rate, the amount a person’s Universal Credit is reduced by as they earn more, dropped from 63% to 55%.
Work allowances, the amount eligible claimants can earn before their Universal Credit is reduced, have also increased by £500 per year.
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The joint venture means almost two million of the lowest-paid working families will be better off each year by an average of £1,000.
The Department for Work and Pensions has introduced the changes as quickly as possible, passing regulations last week to secure the higher payments for the lowest earners in time for Christmas.
Work and Pensions Secretary, Thérèse Coffey said: "Tens of thousands of the lowest earners will see a boost to their bank accounts today following changes to Universal Credit, meaning that people can keep more of what they earn to help with the cost of living.
"We introduced this change earlier than planned which will see up to 500,000 more households benefitting before Christmas."
The change was brought in on December 1 2021 with the Work Allowances are increasing to £335 and £557 per month.
The changes mean, for example, that a single mother of two, renting in Darlington, working a full-time job on the National Living Wage, will see her take-home income increase by £1,200 on an annual basis.
Meanwhile, a couple with two children, renting their home, where one partner works full time at the National Living Wage and the other works 16 hours a week earning the same, will be £1,800 per year better off.
Vulnerable households across the country are also able to access the £500 million Household Support Fund to help them with essentials over the coming months as the country continues its recovery from the pandemic.
Karl Handscomb, senior economist at the Resolution Foundation, said: “The Chancellor announced two very welcome major changes to Universal Credit in the Budget last week, which will boost the incomes of low- and middle-income working families.
“These changes will allow millions of workers to keep more of each extra pound they earn as a result of marginal effective tax rates falling to rates last seen a decade ago. An additional 330,000 families will also become eligible for Universal Credit.
“But while welcome, these changes are not enough to offset the damage from the recent £20 a week cut to Universal Credit. While 1.3 million families on Universal Credit will be better off, almost three-quarters of UC families will see their incomes fall this Autumn as the cost of living crunch bites.
“Universal Credit has performed extremely well during the crisis. But the recent cut in support means that our basic safety net remains far too weak to support families facing economic bad news.”
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