This is what you need to know about today's Universal Credit changes

Around 500,000 workers who claim Universal Credit are estimated to be in line to benefit before Christmas (Photo: Shutterstock)

The Government has brought in changes to the Universal Credit benefits system today (24 November).

As was first announced by the Chancellor Rishi Sunak in October’s Autumn Budget 2021, two million people with low-incomes will now receive what is effectively a tax cut.

Alongside increased funding to support new parents with their childcare, the changes form part of a bid from the UK Government to show it is supporting working families.

But the announcements came just weeks after the Government ended the £20-a-week uplift in the benefits payment that was introduced in response to the Covid-19 pandemic.

So how has Universal Credit changed - and will benefits claimants be better off than they were when the Covid uplift was in force?

Here’s what you need to know.

What is Universal Credit?

Universal Credit is a benefit payment for people over the age of 18 but under 65-years-old - i.e. state pension age.

The benefit has a standard allowance that applies to claimants, the size of which depends on their age and whether or not they have a partner.

This allowance can be topped up further if the person withdrawing it has children, a disability and/or needs help paying rent.

The Universal Credit changes affect how much of the benefit is removed once the claimant earns earns money above their work allowance (image: Shutterstock)

It was announced by the Coalition Government in 2010, as it sought to simplify the benefits system by rolling a range of different schemes into one.

UC started rolling out from 2013 and, according to the latest Government statistics, was supporting 5.9 million people across the country in the second quarter of 2021.

A £20-per-week uplift to UC was introduced in March 2020 to help new claimants to adjust to the extra costs created by the coronavirus pandemic.

But this was brought to an end by the Government at the beginning of October 2021.

What has changed?

In his Autumn Budget 2021, Rishi Sunak said he would alter the Universal Credit taper rate.

This rate is the amount of benefit that’s taken away if the claimant earns money above their work allowance - the amount of money you can earn without a reduction in your benefit.

If you and your partner have kids, and/or are living with a disability that restricts how much you can work and also get help with your housing costs, the allowance is £293. If you don’t get housing support, you get an allowance of £515.

Previously, for every £1 a UC claimant earned above their work allowance, 63p was taken away.

But the Chancellor said in his speech that this was a “hidden tax on work” and announced that he would cut the taper rate by 8%.