This section provides all of the latest information about the Government's Welfare Reform Plans and how these may affect you.
These are the main changes:
Benefit changes from April 2016
Benefit Cap reduced:
The Benefit Cap is the total amount of income from certain benefits which a household can receive, this is currently £500 per week if you are a couple or have children or £350 per week for single people with no children. If you receive more than the benefit cap allows, your housing benefit will be reduced until it is brought back within the benefit cap. From April 2016 the Benefit Cap will be set at these levels for people living outside of London:
£335 if you are a couple or have children and live outside London
£258 if you are a single person and live outside London
The benefits included when seeing if your benefit income exceeds the benefit cap are:
Child Benefit & Guardian's Allowance
Child Tax Credit
Employment and Support Allowance (except when in the support group)
Severe Disablement Allowance
Widowed Parent's Allowance & Bereavement Allowance
If you are affected by the reduction in the Benefit Cap your Housing Benefit will be reduced at some point after April 2016. When this happens will depend on where you live and as yet no schedule has been released.
Tax Credits withdrawn sooner and at a faster rate as income rises:
Currently a household receives the maximum amount of Tax Credits until an ‘income threshold’ of £6,420 is reached. After this point the Tax Credit is reduced by £0.41p for every £1 the household is over the ‘income threshold’.
From April 2016 the ‘income threshold’ will be reduced to £3,850 per household and the ‘taper rate’ will be increased from a £0.41p to £0.48p Tax Credit reduction for every £1 the household earns above the £3,850 ‘income threshold’.
Additionally the amount a household income can increase during a tax year before being ignored when calculating tax credits will be reduced from £5,000 to £2,500.
These changes have been taken into account when estimating Tax Credit entitlements for 2016/17.
Housing Benefit family premium abolished:
From April 2016 the Housing Benefit family premium will be abolished for new claims and new births.
The £17.45 family premium is added to your Housing Benefit if you have one dependent child, the premium will continue to be paid if you are already claiming Housing Benefit and have a child. If you are already claiming Housing Benefit but your child is not due to be born until after April 2016, you will not be entitled to the family premium.
Benefit and Tax Credit rates frozen for four years
Housing Benefit backdating reduced
Universal Credit work allowances reduced
Social Housing rents to be reduced by 1% every year for four years
National Minimum Wage increase
Personal Tax Allowance increase
Benefit changes from April 2017
Child Tax Credit limited to 2 children and family element abolished for new claims or new births
Universal Credit limited to 2 children and 'first child premium' abolished for new claims or new births
Housing Benefit not available for unemployed 18-21 year olds (exceptions apply)
Parents claiming Universal Credit to look for work when youngest child turns 3
Universal Credit youth obligation for 18-21 year olds
Employment and Support Allowance Work Related Activity component abolished
Universal Credit Limited Capability for Work component abolished
Free childcare increased from 15 to 30 hours per week for 3 and 4 year olds
Social tenants earning over £30,000 (£40,000 in London) to pay market rate rents
Free TV licence for over 75s to be funded by BBC