What is the Universal Credit taper rate?
THE Universal Credit taper rate limits the amount of earnings those claiming the benefit can keep – and it’s been hitting cash-strapped Brits. The government has announced that the rate will be slashed, helping out hard-up workers but what exactly is it? It’s a major win for The Sun’s Make Universal Credit Work campaign, and will allow workers to […]
THE Universal Credit taper rate limits the amount of earnings those claiming the benefit can keep – and it’s been hitting cash-strapped Brits.
The government has announced that the rate will be slashed, helping out hard-up workers but what exactly is it?
It’s a major win for The Sun’s Make Universal Credit Work campaign, and will allow workers to keep more of the money they earn and incentivise people to take on extra work.
We explain all you need to know – and how today’s Budget announcement will change things.
What is the Universal Credit taper rate?
The Universal Credit taper rate affects those claiming the benefit who are also working but are on low incomes.
The taper reduces amount Brits get by 63p in every £1, over a certain amount.
It kicks in once claimants are earning above the Work Allowance, if they are eligible.
You get a Work Allowance if you (or your partner) are responsible for a child or have limited capability for work.
How much it is depends on whether you claim the Housing Costs element of Universal Credit.
The monthly Work Allowance is set at £293 if your Universal Credit includes Housing Support, and £515 if it doesn’t.
Most read in Money
So you’ll lose 63p of your maximum Universal Credit award payment for every £1 over the Work Allowance.
The taper rate is applied to your Universal Credit payments automatically and you should be able to see the deductions on your account.
Read our Budget 2021 live blog for live updates
The taper rate puts thousands of claimants off applying for better paid jobs or taking on more hours.
The Sun has been calling for the government to increase the allowance and reduce the taper rate, as part of our Make Universal Credit Work campaign.
How is the taper rate and work allowance changing?
The taper rate will be slashed to 55p allowing claimants to keep more of their cash.
It means millions of Brits will be able to hang on to an extra £1,000 year, Chancellor Rishi Sunak said.
The change will come in sooner rather than later, softening the blow for the lowest paid ahead of a tough winter while families are being battered by soaring energy, food and fuel costs.
Changes to benefits usually come in at the start if the new tax year in April.
But the taper rate change will come in no later than December 1 this year, the Chancellor said.
Around 1.7million households will benefit from the taper rate according to The Joseph Rowntree Foundation.
The work allowances will rise by £500 too, and will change by the same date.
It means that workers can keep more of the cash they earn before the taper rate kicks in.
We’ve asked the Treasury if it applies to both work allowance rates and will update when we hear back.
The £293 allowance which includes Housing Support would rise to £793, and the £515 allowance for those without housing costs would increase to £1,015.
The government said that both changes will directly benefit 1.9million households.
It will also help to give claimants more support after the £20 weekly uplift to Universal Credit payments was slashed earlier this month.
The government introduced a £20 a week raise to help claimants through the coronavirus pandemic, but it was scrapped on October 6.
Joseph Rowntree Foundation estimated that 5.5million families lost out on the axed £1,000 boost a year, with £440million in total wiped off monthly incomes.
We pay for your stories!
Do you have a story for The Sun Money team?
Email us at money@the-sun.co.uk