Universal Credit: What is changing and who is impacted?

Brent is the second most affected UK authority by the government’s benefit cap (Pic credit: PA)

People who receive universal credit stand to lose more than £1,000 per year when the uplift is cut. - Credit: PA Wire/Press Association Images

With changes to Universal Credit payments this week, here's our guide to what is changing, who is impacted and how much your payment could be reduced.

What is Universal Credit? 

Universal Credit is a single, monthly payment to help people with their living costs.

People may be eligible to receive it if they are on a low income, out of work or cannot work.

What is changing?

A temporary boost of £20 a week to Universal Credit payments was introduced in March last year to help those struggling during the Covid pandemic.

However, this increase is being removed from Wednesday, October 6.

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The actual date people will stop receiving the extra money depends on when they usually receive their welfare support payment.

This cut amounts to a loss of about £1,040 a year for low-income families.

Who is impacted?

More than 5,120,000 people in England receive Universal Credit, according to the latest figures from the Department for Work and Pensions.

About 40 per cent of recipients nationally are employed.

Analysis by the independent Joseph Rowntree Foundation has shown removing the payment risks pulling half a million people – including 200,000 children - into poverty.

Think tank Resolution Foundation claims removing the uplift will cut the incomes of the poorest families by more than five per cent overnight.

Why is it being cut?

Many MPs have called for the uplift to be made permanent, but the government has said it was always a temporary measure. 

A government spokesperson said: “The temporary uplift to Universal Credit was designed to help claimants through the economic shock and financial disruption of the toughest stages of the pandemic, and it has done so. 

“Universal Credit will continue to provide a vital safety net.

"With record vacancies available, alongside the successful vaccination rollout, it’s right that we now focus on our plan for jobs, helping claimants to increase their earnings by boosting their skills and getting into work, progressing in work or increasing their hours.”

How much could I lose? 

Every Universal Credit claim will drop by about £85 a month, but the proportion of income varies depending on personal circumstances.

The charity Citizens Advice calculates standard monthly allowances will drop by a quarter for single people under 25 (£344 to £257.33) and by a fifth for those older (£411.51 to £324.84).

Joint claimants face a 17 pc cut (£490.60 to £403.93) if under 25 or 14 pc (£596.58 to £509.91) if older.

Analysis by Citizens Advice has shown £20 a week is equivalent to six days of energy costs or three days of food costs for a low-income family.