Benefit Changes and what you need to know…
Significant changes to the welfare benefits and tax credits system have been taking place over the past few years, with more scheduled for later this year and beyond. Kelly-Marie Jones, Welfare Benefits Specialist at the charity explains more about some of these Benefit Changes.
The charity Turn2us recently found that almost three-quarters of families who claim means-tested benefits are worried about future welfare reform. Worryingly, two-thirds said they would feel more stressed about their financial situation if their benefits were to be cut or reduced, and over half are concerned they would struggle to provide for their children.
That’s why Turn2us is working to raise awareness of these changes so that families can understand how and when they might be affected and find further support.
Introduction of Universal Credit
As you may be aware, Universal Credit (UC) is gradually replacing six means-tested benefits for working-age people – Income Support, Income-based Jobseekers Allowance, Income-related Employment and Support Allowance, Housing Benefit, Working Tax Credit and Child Tax Credit.
UC is intended to be simpler than the current system, and it will be paid on a monthly basis. It is also expected that most claims will be made and managed online.
During 2016, roll-out will continue, with new benefit claimants making a claim for UC rather than the benefits it replaces.
You don’t need to do anything if you are already claiming one of the existing benefits – you will be told by the Department of Work and Pensions when to make a claim. The government currently expects that existing claimants will start to move over to Universal Credit during 2018, with the process completed by 2021.
Lowering of the Benefit Cap
The Benefit Cap limits the maximum amount of benefits that working-age out of work families can receive.
The government plans to lower the cap from Autumn 2016. It will be reduced to £23,000 for families in London (£15,410 for single claimants) and £20,000 elsewhere (£13,400 for single claimants).
Households claiming Working Tax Credit or benefits for a disability or illness are exempt from the cap. The government has also announced that from Autumn 2016, it will introduce exemptions for people claiming Guardian’s Allowance, Carer’s Allowance and the carers element of Universal Credit.
Tax Free Childcare
From early 2017, Tax Free Childcare will be introduced as a replacement for employment supported childcare (sometimes referred to as a Childcare Voucher Scheme).
This will operate through an online Childcare account, which you will pay your childcare costs into, and the Government will ‘top-up’ the account with their contribution. For every £8 you pay in, the government will pay in £2. It will put in a maximum of £500 every three months for each child – or £1,000 if your child has a disability. The money will then be paid directly from the account to your childcare provider.
The accounts involve no fees and will allow you to build up credit for use when you need it most, for example during school holidays.
In addition to full-time workers, it will, for the first time, cover you if you are self-employed, working part-time, on maternity, paternity or adoption leave, or starting your own business.
The scheme will be available to people who have an annual income under £100,000 and are not receiving help with childcare costs via tax credits.
Tax Credit Changes
Normally the amount of tax credits you receive increases with your family size. From April 2017, this will be limited to two children. This means that families receiving tax credits or Universal Credit will receive no extra support for a third or subsequent child born after 6 April 2017. This restriction will also apply to families claiming tax credits or Universal Credit for the first time after April 2017.
In addition, people starting a family after April 2017 will no longer be eligible for the Family Element in tax credits – this is a payment of £545 per year awarded for claimants with at least one dependent child. The equivalent in Universal Credit, known as the first child premium, will also not be available for new claims after April 2017.
ESA Work-Related Activity Group
From April 2017, new claimants of Employment and Support Allowance (ESA) who are placed in the Work-Related Activity Group, will receive the same rate of payment as those claiming Jobseeker’s Allowance and the equivalent in Universal Credit.
This will not apply to existing ESA claimants, or those who are placed in the ESA Support Group.
Capping Housing Benefit in the Social Rented Sector
From April 2017, new or renewed tenancies for supported accommodation in the social sector will be subject to a cap on Housing Benefit in line with Local Housing Allowance rates.
Free Childcare Extended
From September 2017, free childcare entitlement will be doubled from 15 hours to 30 hours per week for working parents of 3 and 4 year olds.
You can find out more about all of these changes on the Turn2us Benefits Changes Timetable.
If you are worried about a possible reduction in income as a result of the changes, you can use the free Turn2us Benefits Calculator to ensure you are claiming all the help you are entitled to. You can also use the charity’s Grants Search to see if you might be eligible for additional support from a grant-giving charity.
If you would like further help with your situation, you can use the Turn2us Find an Adviser tool to find face to face advice in your local area.