Budget 2021: Sunak announces Universal Credit taper cut
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For people who claim both benefit payments at the same time, the DWP has clarified what people will get if they have Covid and are self-isolating. Furthermore, department officials are looking into improving the assessment process for benefits claims, including having assessment video recordings. On top of this, Chancellor Rishi Sunak announced changes to the Universal Credit taper rate during his Budget speech in the House of Commons last week.
On Twitter, Mr Sunak said: “We are cutting the Universal Credit Taper Rate not by one percent, not by two percent – but by eight percent. From 63p to 55p.
“The taper rate withdraws support gradually as people work more hours. “It is currently 63 percent, so for every extra £1 someone earns, their Universal Credit is reduced by 63p.
“Let’s call this what it is: a tax on work. And a high rate of tax at that. So, to make sure work pays, and help some of the lowest income families keep more of their hard-earned money.
“I have decided that the UC Taper Rate will be cut, not by 1p or even 2p – but by 8p. This is a tax on working people – and I’m cutting it from 63p to 55p.
“I’m also increasing the Work Allowances by £500, this is a tax cut next year of £2.2billion. Nearly two million families will keep, on average, an extra £1,000 a year.
“We’ll introduce not in April as normal but within weeks, and no later than December 1.”
On top of this, Universal Credit claimants can also receive the New Style ESA payment if they have a health condition or disability which limits their ability to work on a daily basis.
New Style ESA is available to people who are employed or self-employed or unemployed.
Usually, the majority of someone’s income does not affect the amount they receive in ESA, but a personal pension may do so.
If someone gets Universal Credit and New Style ESA, their Universal Credit payment is reduced by the exact amount of the ESA.
This means they will not receive any additional cash from the DWP, according to current Government plans.
However, this is dependent on someone’s National Insurance and pension income contributions also.
As part of the Government’s rule change, claimants of both Universal Credit and ESA will be able to receive their payments at the same time.
Despite this, if someone gets both payments, their Universal Credit payment will be reduced by the amount of ESA they get.
While this may be to the detriment of many claimants, receiving ESA is considered more advantageous as it is paid more regularly than Universal Credit.
If some is receiving ESA because of the pandemic, they will be required by the DWP to prove they have been affected by Covid.
New Style ESA does not include any additional amounts for children or for housing costs, which also makes it different to Universal Credit.
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