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Universal Credit changes tomorrow could mean you get an extra £1,000 a year – are you eligible?

MORE than 1.5 million Universal Credit claimants could be £1,000 a year better off under new rules that come into force tomorrow.

The work allowance will be raised by £500 a year, meaning in-work claimants of Universal Credit can keep more of their hard-earned pay.

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In-work Universal Credit claimants will be able to keep more of their hard-earned payCredit: Alamy

At the same time, the taper rate will fall from 63 per cent to 55 per cent.

The move follows The Sun's Make Universal Credit Work campaign to overhaul the benefit and boost payments to claimants in work.

The controversial taper rate effectively taxes recipients 63p in the pound on anything they earn over their base level of benefits.

It's been accused of discouraging thousands from applying for better paid jobs or taking on more hours as they are effectively penalised for earning more.

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Tomorrow's policy change means Universal Credit claimants will now get to keep 12 per cent more of their earnings above the work allowance.

The reduced taper rate will be 55p.

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On average, that's a £1,000 annual boost for a third of the 5.2 million people currently claiming Universal Credit.

Calculations by the Joseph Rowntree Foundation show that a single parent working 16 hours a week, who has a five-year-old child, will be £8 a week better off under the changes - or £96 a year.

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A family of four with young kids where one parent works full-time and the other works 16 hours a week will be better off by £31 a week - or £372 a year.

How will the changes affect me?

It depends on your circumstances.

Your work allowance is the amount you can earn before your Universal Credit payment is affected.

If your pay is £1,000 above your work allowance, for example, you get to pocket £500 more straight away - and hundreds of pounds extra in the taper rate cut.

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With inflation on the rise and a cost of living bite in the run-up to Christmas, 1.7 million families are set to gain from the much-needed change.

But two-thirds of Universal Credit claimants will not see any boost.

In fact, many claimants are net losers from recent government changes to the benefit, which was cut by £20 per week last month.

That's because not everyone on Universal Credit has a work allowance.

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You're only eligible if you have responsibility for a child or a limited capacity for work.

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Otherwise, your earnings will be deducted straight from your Universal Credit payments.

The monthly work allowance is set at £293 a month for claimants also receiving housing support as part of Universal Credit or from their Local Authority.

It's £515 per month for claimants who do not get any housing support.

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Those on Universal Credit and not in work will not benefit from the changes to the benefit.

The DWP said an explainer video on the changes will be released shortly.

Universal Credit is not the only benefit set to change before the end of the year.

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Working tax credit is to return to normal after changes during the pandemic.

There are also changes to payment dates over the festive period, which are well worth knowing about including Universal Credit and State Pension.

Martin Lewis urges anyone claiming Universal Credit to start a help to save account

 

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