In the Autumn 2021 Budget, the Chancellor announced a benefits change for working claimants in the form of a 8% taper rate cut.
This is a reduction in the rate at which benefits are deducted for every £1 earned over the work allowance ( i.e. the amount a claimant can earn before the Universal Credit payment is affected).
What is the Taper Rate?
The taper rate is how much the maximum Universal Credit payment is reduced when the claimant starts earning again. The taper rate was at 63% before the budget but from 01 December will be at 55%.
The taper rate has been seen as a way to raise treasury funds and there has been previous speculation that it may rise to 75%. Such a move has been opposed as it does not incentivise claimants to work more hours as they lose benefits as a result. The 2021 budget attempted to encourage people to work and keep more of their earnings. Reducing the Taper Rate will allow working families on Universal Credit to save around £9 a week.
How does the Taper rate of 55% affect me?
Work out the earnings taper that applies to your Universal Credit:
This is the amount that will be taken from your Universal Credit maximum amount when calculating your award.
This only applies if you are earning enough to pay national insurance. (£9,564 a year)
*You are eligible for a work allowance if you (and/or your partner) have:
Monthly allowances are currently set at: £293, if your Universal Credit includes housing support. Allowances are £515, if you do not receive housing support.
Will this make up for the uplift ending?
A single mother of two earning the national minimum wage will see their take home pay increase by around £1,200 a year as a result of the reduction in the Universal Credit taper. This is £361 a year less than the £20 a week uplift provided. The reduction in taper only affects 2 million families (37% of claimants) that are in work whereas 4 million people who are out of work will not benefit from this change. The overall effect of the removal of the £20 uplift is that 5.5 million people across the UK saw their payments cut by £1,040 a year when the uplift ended.
Claimants unable to work because of health problems and caring responsibilities have not been assisted with rising costs of living and 400,000 families do not earn enough for the taper reduction to come into effect.
60% of Universal Credit claimants won’t benefit and will continue to feel the full impact of the £20-a-week cut. For claimants that will benefit from the taper reduction it will only come into effect from 01 December 2021 so they will be without additional support for over two months as the £20 uplift ended at the beginning of October 2021.
The Joseph Rowntree Foundation (JRF) says that 1.4 million households still claim Working Tax Credit and have not moved to Universal Credit, so they also would not benefit.
There is concern that the removal of the £20 uplift, the reduction in Taper and the Household Support Fund, will not go far enough to adequately support the nations most vulnerable during a typical Winter and Christmas period.
Luca Difato, Operational Team Support Administrator & Communications Assistant. 11th November 2021.