Universal Credit update: Five key changes that could affect your money this year

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Millions of claimants will be affected by these changes and should expect how much they receive and how they receive it to be different. The past couple of years have been challenging for many Britons due to the pandemic and those receiving Universal Credit were dealt a major blow in October when the £20 a week uplift was ended.

This left many people facing a choice between heating and eating over winter. However, changes announced in the Budget should see millions of workers on the benefit get an extra £1,000 a year.

What is changing?

1 The Taper rate


The taper allowance limits the amount of earnings that those claiming Universal Credit can keep. It was heavily criticised for effectively discouraging people from working more hours.

But the rate is now being decreased, meaning workers can keep more of what they earn.

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In the past, workers lost 63p for every £1 they earned over a certain amount.

This has now been cut to 55p, meaning that Briton’s can keep hundreds of pounds more of their hard-earned cash.

The change has already come into effect but 2022 will be the first full year that claimants enjoy the benefits of the change.

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2 The Work Allowance
The Work Allowance is the amount people can earn before the taper rate kicks in and their Universal Credit is reduced.


As earnings increase, people’s benefit payments reduce until their income is enough that they can no longer claim.

This has now gone up by £500 so people can earn more before their Universal Credit payments start to be reduced.

Coupled with the reduced taper rate, this change should mean claimants get to keep £1,000 more of their earnings every year.

3 Account deposits
Post Office card accounts have been a popular way for people to receive their benefits, however Britons are urged to set up alternative arrangements or they risk not receiving their money.

An estimated 382,000 people use a Post Office card account, which can be used to withdraw money with no fees or charges.

Anyone who already has a bank or building society account can choose for their payments to be made there instead.

4 The surplus earnings threshold
The surplus earnings threshold will reduce to £300 in April 2022.

Universal Credit claimants will continue to get the higher surplus earnings threshold of £2,500 until then.

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

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The surplus earnings are then carried forward to the following month, where they count towards one’s earnings.

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

5 Benefit rates are rising
Many benefit rates are set to rise next year by 3.1 percent in line with inflation and the cost of living.

Many people can receive more from April.

For example, the Universal Credit standard allowance will rise by £10.07 a month from £257.33 to £265.31 for those single and aged 25 and over.

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