The work allowance in Universal Credit - the amount you can earn without your benefit being affected - will be reduced from April 2016.
Universal Credit Work Allowances Changes
Universal Credit is the new means-tested benefit for working age people who are on a low income. It is paid monthly and can be claimed whether you are in or out of work.
The benefit is gradually being introduced across the UK and replaces six existing means-tested benefits – Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Income Support, Housing Benefit, Child Tax Credit and Working Tax Credit.
To encourage people to take up work, Universal Credit allows claimants to keep a certain amount of their earnings - known as 'work allowances’ - which are not taken into account when calculating entitlement to the benefit.
From the 11 April 2016, the work allowance levels are reduced. The change will mean that a work allowance will only be available where a claimant (or joint claimant) is responsible for a child or qualifying young person and/or is unable to work because of illness or disability.
For disabled people and people with children, the work allowance will be reduced to £192 per month if they have a housing costs element in their claim and £397 per month if there is no housing costs element in the claim.
The work allowance will be abolished altogether for non-disabled claimants without children, resulting in their benefit being reduced as soon as they start earning.
By way of comparison, the current lower work allowance is, for example, £111 per month for a claimant without a child who has a housing costs element in their claim, but as much as £263 per month for a single person with children who has a housing costs element in their claim.
Impact of Universal Credit Work Allowance Changes
The cut to work allowances weakens incentives for people to take up work especially non-disabled households without children.
Although the work allowances have been maintained for the vulnerable and people with children, the significant reduction in the amount of earnings that will be able to be kept, without Universal Credit benefit being affected, still sees these groups facing a significant drop in income as a result the changes.
There is no transitional protection arrangements to allow the work allowance changes to be brought in gradually to help existing Universal Credit claimants prepare for a possible drop in income.
Government reports state that the work allowance change is being made to ‘simplify the range of work allowances’. However, in reality the changes simply make them far less generous in a number of cases.
What help is available if you are struggling on a low income?
You can use the free Turn2us Benefits Calculator to check your benefits entitlements. Even if you have checked before, it is worth checking again, especially if there has been a change in your circumstances.
You can also check if you are eligible for a charitable grant or other support by using the Turn2us Grants Search.
You can get further details on all the upcoming benefit changes on the Turn2us Benefits Changes Timetable 2016.
If you are worried about the work allowance changes or any benefit changes and would like further advice, you can use the Turn2us Find an Adviser tool to locate face-to-face advice in your local area.