Working tax credits increase announced
The government has announced an increase to its annual working tax credits allowance of £1,045, along with new measures to boost Universal Credit and Child Benefit payments.
The change to the allowance, which has taken effect from 6 April, comes at a time of huge financial uncertainty for many households during the coronavirus outbreak. And it could mean up to an extra £20 per week for some recipients.
The increase will be effective until 5 April 2021, and it’s anticipated that up to four million households across the UK could benefit.
What’s more, an additional £1,000 has been added for the time being to the standard allowance of Universal Credit to give a little extra support to those who have found themselves out of work or self-employed.
Other working-age benefits have also increased with inflation, marking an end to the UK government’s four-year freeze on benefits, which was originally introduced in 2016 by then chancellor George Osborne.
Some people may also see their benefits payments arrive a little early, due to the Easter Bank Holiday weekend.Get free advice
What other benefit payments are affected?
Several other benefits have seen a 1.7% increase this April in line with inflation. These include:
- Personal Independence Payment and the highest rate of Disability Living Allowance, which have increased from £87.15 to £89.15 per week.
- The higher rate of Attendance Allowance, which has gone up from £87.65 a week to £89.15.
- Carer’s Allowance, which has increased from £66.15 a week to £67.25.
- Universal Credit, which has increased from £317.82 per month to £323.22 per month for standard allowance recipients aged 25 and over.
- There are also small increases to the amount people will receive for income support, jobseeker’s allowance and employment and support allowance, with the weekly figure increasing from £73.10 to £73.45.
Child benefit will increase from £20.70 to £21.05. If you have previously chosen to opt out, you can now reapply due to the circumstances of the coronavirus outbreak. If you’re on furlough, for example, your income could have decreased by 20%, and you may now meet eligibility criteria.Get free advice
What is working tax credit?
Working tax credit is a means-tested benefit that was introduced in 2003. For most people, it has been replaced by Universal Credit. In order to receive this benefit you must be working a certain number of hours per week; over 30 hours per week if you’re aged 25 – 59, and over 16 hours per week if you’re aged 60 plus, single with one or more children or disabled.
The basic amount received by most households has increased to £3040 per year. On top of this, there are extra elements to the working tax credit payment, which are dependent on your individual circumstances, and those of other members of your household.
For example, if you are a single parent, you’ll also receive up to £2040 per year over and above the basic amount. If you have a disability, you’ll receive up to £3,220 per year, and if you have a severe disability, it could be up to £1390 over and above this.
How do I apply for working tax credits?
If you already receive working tax credits, you won’t need to take any action. Your benefit payment increase should happen automatically. This increase will be reflected in your basic payment, but the amount paid for any additional elements won’t change.
To find out how much you could get in tax credits in a given four-week period, there’s a handy calculator on the gov.uk website that can help.Get free advice
How do I get Universal Credit?
If you need to apply for Universal Credit, it’s worth bearing in mind that the application process has recently changed to accommodate the current high volumes of applicants – over 950,000 in the first two weeks of the coronavirus lockdown.
Formerly, you may have had to arrange an appointment with your local Jobcentre or call the DWP. To help people through the current circumstances of coronavirus, the application process has been streamlined, and you can now apply via the gov.uk website.
If you’ve been left out of work due to the COVID-19 outbreak, government advice is to apply as soon as possible. You can expect your first month’s payment in advance, without having to visit a Jobcentre.
If you’ve been left worrying about debt and how to pay it as a result of the coronavirus outbreak, we can help with free advice on how to deal with it, once and for all. Speak to one of the Creditfix team on 0808 253 3299 and get some clarity on your financial future.Get free advice