Autumn Budget 2021: Rishi Sunak’s Pay Rise for Workers

BUDGET - Two of the key points in Rishi Sunak's Autumn budget are the reduced Universal Credit taper rate and the rise in National Living Wage. 

Both policy changes have the potential to help millions of Brits, but by how much? Here’s what the announcement means in real terms for your finances. 

James Andrews, senior personal finance editor at money.co.uk said: “The taper rate refers to the cash amount withdrawn from claimants who are in work and receiving Universal Credit at the same time. As workers clock up more hours and earn above a certain threshold, their Universal Credit is reduced.

“Today, Rishi Sunak slashed the taper rate, which is the amount of every pound lost when a claimant takes on work, from 63 per cent to 55 per cent. 

“The move will benefit around 40% of Universal Credit claimants who are in work and able to take on extra hours.

“In even better news, the change to taper relief - letting people keep 8p more of their benefits for each pound they earn elsewhere - is coming soon. While most changes announced in the Budget won’t come into force until April, Rishi Sunak promised this would come into force in ‘weeks’ and certainly by the end of December.

“Many of the people benefiting from this change will also be boosted by the National Living Wage rising from £8.91 per hour to £9.50 for those aged 23 and over in April 2022.

“The combination of the taper rate reduction and wage increases will benefit millions of minimum wage workers across the country.

“Under current Universal Credit rules, if you earn £100 a month above your work allowance, you will lose £63 of your UC payout. However, following today’s announcement, you will lose only £55, representing a significant boost to income.

“According to the Chancellor, a single mother of two earning the National Living Wage will see her take home pay increase by around £1,200 a year.

“Meanwhile, the National Living Wage increase means a minimum wage worker over 23 years of age working 35 hours a week will enjoy an annual pay rise of £1,073.80. 

“For a full breakdown of how today’s budget impacts your personal finances, head to: https://www.money.co.uk/guides/autumn-budget-2021.”

Headlines

• Universal Credit- earnings taper decrease- 63% to 55%
• Universal Credit- increase in work allowances by £500
• Living Wage / minimum wage increase
• Household Support Fund Confirmed
• Complete the rollout of Universal Credit by March 2025
• Extension of eligibility for bereavement benefits to cohabitees with children
• Moving back the Pension Credit to Housing Benefit merger date
• Extending the increase in the Universal Credit surplus earnings threshold
• Shared Accommodation Rate exemptions for victims of domestic abuse and victims of modern slavery
• Extension of Employment and Support Allowance COVID-19 regulations
• Terminal Illness definition- 12 months
• State Pension uprating
• Minimum PIP proposal scrapped

ABC Comment, have your say below: