Autumn Budget 2017

Tax Credits & Universal Credit

After significant political pressure in recent weeks Philip Hammond has thankfully today bowed to the representations made and announced a u-turn of sorts on the rollout of Universal Credit (UC).  Further information on this policy change will be announced in a statement by the Department for Work & Pensions to the House of Commons on 23 November.

What do we know so far?

UC was introduced in 2013 and is gradually being rolled out across the country.  It is a new benefit that will eventually fully replace Working Tax Credit (WTC) and Child Tax Credit (CTC) as well as some other means tested benefits.

Within Cumbria, in Eden District we have not yet been transferred across onto the new benefits system.  Those living in some postcode areas in Allerdale however will already have been moved across, with reports of many facing significant financial hardship as a result of the change and the loss of their WTC/CTC. It has previously been announced that all WTC/CTC claimants will be fully moved across to the new benefits system by September 2018 at the latest.  The new benefit has been significantly criticised in recent months mainly because of the length of time claimants have to wait to receive the first payment but also because the new benefit leaves many people far worse off financially than they would have been under the old WTC/CTC system.

Unfortunately the self-employed currently claiming WTC/CTC are most likely to be hit the hardest when they are moved across to UC.  There are fundamental differences in the way the two systems work and consequently many people are going to see a significant reduction to their payments (in some cases this will amount to thousands of pounds per year) and in many cases claims and payments will cease altogether.

For those already within the new UC system or about to be moved across, the summary of the main changes as announced today are:

  • From February 2018 there will no longer be a seven day waiting period so that the UC claim will start on the first day that the application is made
  • From January 2018 claimants will be able to access up to one month’s worth of UC payments within five days via an interest free advance. This is intended to help those who are struggling with everyday living expenses and payment of rent for example so that they have access to the payments sooner. In addition claimants who have been receiving housing benefit previously will continue to receive their housing benefit award for the first two weeks of their UC claim.

Many WTC/CTC claimants will already be aware of the changes that are coming when UC is rolled in but if you have any concerns as to how you might be affected please contact us.

 

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Feb 25

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