THOUSANDS of households on Universal Credit will see a boost in their payments from this month as new changes are introduced – making them up to £600 a year better off.
The two key changes are related to childcare and the amount that can be deducted from your payments.
1
From this month, the maximum amount that can be taken off your benefits will be reduced from 40 per cent to 30 per cent.
The Department for Work and Pensions (DWP) is yet to announce exactly when this change will come into effect but told The Sun it will be later in October.
The other change to the scheme that is due to come in this month will give parents extra time to claim back up to 85 per cent of childcare costs.
We take a closer look at what the Universal Credit changes mean for the money in your pocket:
What are the deductions and what’s changing?
The maximum amount that can be deducted from your Universal Credit is being reduced to 30 per cent of your standard allowance, down from 40 per cent.
It means that for example, if you’re entitled to £317.82 standard allowance (the rate for a single claimant over 25), the most that can be taken off to repay debts is £95.35 compared to £127.13 before.
Around 850,000 people face these reductions every month, with 238,000 of them losing the maximum amount, according to government figures.
What to do if you have problems claiming Universal Credit
IF you’re experiencing trouble applying for your Universal Credit, or the payments just don’t cover costs, here are your options:
Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it’s a loan which means the repayments will be automatically deducted from your future Universal Credit payout.
Alternative Payment Arrangements– If you’re falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently, or you can split the payments if you’re part of a couple.
Budgeting Advance – You may be able to get help from the government to help with emergency household costs of up to £348 if you’re single, £464 if you’re part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You’ll have to repay the advance through your regular Universal Credit payments. You’ll still have to repay the loan, even if you stop claiming for Universal Credit.
Cut your Council Tax – You might be able to get a discount on your Council Tax or be entitled to Discretionary Housing Payments if your payments aren’t enough to cover your rent.
Foodbanks – If you’re really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussel Trust website.
The DWP reckons this will leave couples up to £600 better off over the year.
Deductions are repayments of debts that will reduce the amount you receive in benefits until you’ve paid back what you owe.
These could be down to a range of reasons, for example, you’ve previously been overpaid tax credits which needs to be paid back to HMRC.
You may also be repaying an advance payment taken out to help you through the five-week waiting period for your first payment or a budgeting loan.
You may also see deductions from “third parties” when you’re in arrears, such as your gas, electricity or water provider, rent, child support maintenance and some loans and fines.
You’ll find a list of what’s been taken off appears in the “deductions” section in your journal.
Will Quince, minister for welfare delivery said: “We know that many people move onto Universal Credit with existing debt, or choose to take up an advance to support them before their first payment.
“While safeguards are already in place to ensure that deductions are affordable we’ve taken this extra step to reduce the standard maximum deduction rate from 40 per cent to 30 per cent of the claimant’s standard allowance to ease the burden.
“Unlike the old system, Universal Credit is a flexible benefit that can be adapted as people’s needs change, ensuring they have more control over their working lives and their finances.”
How will the changes to childcare costs affect me?
From today, October 19, working parents will be given an extra month to apply for a refund for up to 85 per cent – or a maximum of £646.35 a month for one child, or £1,108.04 a month for two or more children – of their childcare costs.
Mums and dads currently have to pay for the bill upfront but then have a month to submit evidence on their journal before being reimbursed.
If they don’t provide evidence of the payment in time, they will miss out on the help altogether.
What help is available for parents?
CHILDCARE can be a costly business. Here is how you can get help:
- 30 hours free childcare – Parents of three- and four-year-olds can apply for 30 hours of free childcare a week.
To qualify you must work at least 16 hours a week at the national living or minimum wage and earn less than £100,000 a year. - Tax credits – For children under 16, some working families can get up to £122.50 a week depending on their income to help with childcare costs.
- Childcare vouchers – If your employer offers childcare vouchers you can get up to £933 a year in tax and national insurance savings.
You pay for your childcare before your tax contributions are taken out.
This scheme is now shut to new joiners. - Tax-free childcare – Available to working families and the self-employed, for every £8 you put in the Government will add an extra £2.
Critics say that the month-long deadline doesn’t give parents enough time to get the cash back but now they will have two months to make a claim.
At the time the change was announced, minister for employment Mims Davies said: “Allowing an extra month-long assessment period for people to report their childcare costs means people shouldn’t have to worry about missing out on crucial payments they are entitled to.”
But it still doesn’t address the issue of footing the expensive fees upfront that’s stopping thousands of parents getting back into work.
Single mum Freya Mcfarlane told The Sun how she was forced to turn down paid work for the DWP because she couldn’t foot the £800 childcare bill upfront.
And another mum, Carly Smith, also had to turn down her dream job because she couldn’t afford the upfront childcare costs either.
That’s why The Sun launched the Make Universal Credit Work campaign, calling for a handful of changes that would greatly improve the system.
From slashing the five-week wait time for the first payment to two weeks, paying childcare fees upfront and lowering the taper rate, we believe the scheme could work.
Thousands of Brits claiming benefits are now in the process of being rolled onto Universal Credit, which rolls six payments into one including income support, jobseeker’s allowance, employment support allowance, housing benefit, child tax credit and working tax credit.
Since it’s launch in 2012, it’s faced a barrage of criticism including claims from charities that the system is pushing thousands of families further below the poverty line.
The Sun wants to Make Universal Credit Work
UNIVERSAL Credit replaces six benefits with a single monthly payment.
One million people are already receiving it and by the time the system is fully rolled out in 2023, nearly 7 million will be on it.
But there are big problems with the flagship new system – it takes 5 weeks to get the first payment and it could leave some families worse off by thousands of pounds a year.
And while working families can claim back up to 85 per cent of their childcare costs, they must find the money to pay for childcare upfront – we’ve heard of families waiting up to 6 months for the money.
Working parents across the country told us they’ve been unable to take on more hours – or have even turned down better paid jobs or more hours because of the amount they get their benefits cut.
It’s time to Make Universal Credit work. We want the Government to:
- Get paid faster: The Government must slash the time Brits wait for their first Universal Credit payments from five to two weeks, helping stop 7 million from being pushed into debt.
- Keep more of what you earn: The work allowance should be increased and the taper rate should be slashed from 63p to 50p, helping at least 4 million families.
- Don’t get punished for having a family: Parents should get the 85 per cent of the money they can claim for childcare upfront instead of being paid in arrears.
Together, these changes will help Make Universal Credit Work.
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