Five Universal Credit changes coming in 2022 – how it affects you

Five Universal Credit changes coming in 2022 – how it affects you

01/01/2022

UNIVERSAL Credit will be shaken up in 2022 with new rules changing how much some get in their benefits.

Millions of claimants across the UK are expected to be affected by the changes as payments and how they are received will be affected this year.

Those receiving Universal Credit were dealt a major blow in October when the £20 a week uplift was ended, leaving many facing a choice between heating and eating over winter.

But in a major victory for The Sun's Make Universal Credit Work campaign, changes announced in the Budget should see millions of workers on the benefit get an extra £1,000 a year.

Here is what you need to know about Universal Credit in 2022.

The taper rate has dropped

The taper rate was heavily criticised for effectively discouraging people from working more hours.

But the rate is now being slashed, meaning workers can keep more of what they earn.

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The taper rate effectively limits the amount of earnings that those claiming Universal Credit can keep.

Previously, it meant workers lost 63p for every £1 they earned over a certain amount.

That has now been cut to 55p, put hundreds of pounds extra a year back into people's pockets.

The change has already come into effect but 2022 will be the first full year that claimants enjoy the benefits of the change.

The Work Allowance has increased

The Work Allowance is the amount you can earn before the taper rate kicks in and your Universal Credit is reduced.

As your earnings increase, your benefit payments reduce until your income is enough that you can no longer claim.

The Work Allowance has now increased by £500 so you can earn more before your Universal Credit payments start to be reduced.

This change, together with the reduced taper rate, should mean claimants get to keep £1,000 more of their earnings every year.

According to gov.uk, the monthly work allowance is now £557, up from £515.

If you get help with your housing costs it's £335, up from £293.

You can't get paid into a Post Office account

Post Office card accounts have been a popular way for people to receive their benefits, but HMRC is set to stop making payments into these.

Anyone who gets Universal Credit or other benefits paid into a Post Office account needs to make alternative arrangements or risk not getting their money.

An estimated 382,000 people use a Post Office card account, which can be used to withdraw money with no fees or charges.

Payments from HMRC stopped going into these accounts at the start of December.

Benefits paid by the DWP will soon follow suit in November.

Anyone who already has a bank or building society account can choose for their payments to be made into there instead.

You can do this by updating your Personal Tax Account or Child Benefit account online at gov.uk or by calling 0300 200 3100.

Anyone getting tax credits can change their account details online via gov.uk by calling the tax credits helpline on 0345 300 3900.

For anyone unable to open an account, the government Payment Exceptions Service can be used.

This is a payment card, voucher by email, or text message containing a unique reference number that can be used to access benefit payments from PayPoint outlets in shops and newsagents.

You'll need to speak to your local benefits office to get this set up or respond to the letter about Post Office card account closures you got from the HMRC.

The surplus earnings threshold is changing

Universal Credit claimants will continue to get the higher surplus earnings threshold of £2,500 until April 2022.

But after this time, it will be reduced to £300.

Surplus earnings are taken into account in your next monthly assessment period for Universal Credit.

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For example, if your monthly earnings are more than £2,500 over where your payment stopped – the current threshold – this becomes "surplus earnings".

These surplus earnings are then carried forward to the following month, where they count towards your earnings.

If your regular income and surplus earnings are then still over the amount where your payment stops, your Universal Credit payment will be affected.

Benefit rates are rising

Benefit rates are typically increased every April, with the start of the new tax year.

The amount they change is typically linked to inflation or the cost of living.

Many benefit rates are set to rise next year by 3.1%, the government has confirmed.

That means you could get more money paid from April 2022.

For example the Universal Credit standard allowance will rise by £10.07 a month from £257.33 to £265.31 for those single and aged 25 and over.

You can check out all the new rates for Universal Credit rates here.

Anyone getting housing benefit and allowances for looking after others will get more money too.

Check out the full list of benefit rates rising from next Apriland how much more you'll get.

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