Tuesday, 27 Sep 2022

Universal Credit and benefits changes that were not mentioned in the Budget

The new Chancellor announced a series of new measures to help households and businesses yesterday – especially those suffering during the coronavirus outbreak.

Rishi Sunak announced new minimum wage rates, a new national insurance threshold and changes to stamp duty, as part of his plans for the year ahead.

Cigarettes also went up in price at 6pm on the day, however fuel duty was frozen for the tenth year – meaning consumers shouldn't, in theory, see forecourt prices rise dramatically over the next year.

But what about households on low incomes and those who claim universal credit?

As the roll out of the new benefits scheme continues, we take a look at what changes were hidden in his small print.

Minimum Income Floor


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The Government has temporarily removed the Universal Credit Minimum Income Floor (MIF) to support self-employed people who will lose their income if they have to self-isolate during the coronavirus outbreak.

Universal Credit is calculated for self-employed workers whose business has been running for more than 12 months by predicting what they may earn.

It's worked out by multiplying the national minimum wage with the number of hours you work.

If you fail to earn the MIF, your welfare payments won't be topped up, meaning you may have to work more to increase your income.

Removing it will take the pressure of those who feel they have to work through the sickness in order to be able to pay the bills.

Jobcentre visits suspended if you have to self-isolate

The government has also temporarily suspended Jobcentre visits for those who have to self-isolate due to the COVID-19 outbreak.

Households who cannot leave the house will be able to manage their benefits over the phone of via their work journal instead, without the risk of being sanctioned for missing a visit.

Time to pay back advance payments extended to two years

Those on Universal Credit who take out an advance payment will soon be able to pay it back over two years.

The change means that households will be able to keep hold of more of their monthly benefits as they have longer to repay it.

This won't be coming into effect until October 2021.

Deduction rate reduced from 30% to 25%

The maximum amount that can be taken off your benefits to pay it back is also being reduced from 30% to 25%.

Deductions can be made to repay debts you have with other firms like water or energy companies. These are called "third party" debts.

Putting a cap on it means you get to keep a bit more of your benefit, although you'll be repaying the debts over a longer period of time.

Personal Independence Payment reassessments

People on Personal Independence Payment (PIP) have to go through a review of their health every so often to ensure that they're still entitled to the benefit.

How frequent these are depends on the severity of your condition, but it can vary from anything from annually up to a decade.

The government has said it will reduce the minimum frequency of the reoccurring visits to every 18 months instead.

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