What is classed as a low-income household? Who will benefit from Rishi’s support package

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Rising bills, inflation and stagnating real wage growth have left people with less money to survive in 2022, with many turning to the Government for help. While the crisis has stung households since April, Rishi Sunak commended the first round of targeted measures to the House of Commons today. Over the next few months, the Chancellor will help low-income Britons negotiate a clutch of urgent issues.

What is classed as a low-income household?

In his announcement, Mr Sunak announced a £15 billion support package for Britons struggling with their finances.

The Chancellor said millions of the UK’s “most vulnerable households” would benefit directly from a selection of payments and discounts.

Low-income Britons could receive up to £1,200, depending on their circumstances, including a one-off £650 cost of living payment.

UK pay falls across a range of thresholds depending on the national average, roughly £31,285 before tax as of 2021/2022.

People earning below this fall into the “low income” or “absolute low income” categories.

The low-income threshold is less than 60 percent of the average “net disposable equivalised UK household income”.

People living on 60 percent of £31,285 will receive approximately £18,771 every year.

Britons can also receive Government aid if they are receiving means-tested benefits, which include:

  • Universal credit
  • Income-based jobseekers allowance
  • Income-related employment and support allowance
  • Income support
  • Working tax credit
  • Child tax credit
  • Pension credit

The policies outlined by Rishi Sunak today that eligible households could receive include:

  • £400 energy bills support
  • £650 one-off cost of living payment
  • One-off £300 pensioner cost of living payment
  • £150 disability cost of living payment
  • Support from the now extended Household Support Fund

The Government estimates vulnerable households could receive up to £1,200 combined from one-off payments alone.

Some people will fall into the absolute low-income group, which depends on the inflation-adjusted median household income during a base year.

According to data posted to the House of Commons library, the current base year is 2010 to 2011.

Both low-income estimations may or may not include housing costs.

The data shows that approximately one in six Britons are in relative low income before housing costs.

The estimations work out to 10.5 million in relative low income before housing costs (BHC) and 13. million after (AHC).

A similar number of people are also in absolute low income before and after housing costs.

Approximately 8.8 million people are surviving on an absolute low income before housing costs, and 11.1 million factoring them in.

Many of them can count on help from the Government’s upcoming programme, which helps across several sectors.

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