Universal Credit

What was announced?

The chancellor announced a new national living wage for all workers over 25, starting at £7.20 an hour from April 2016 and set to rise to £9 by 2020 – giving an estimated 2.5 million people an average £5,000 rise over five years.

The personal allowance, the point at which people start paying tax, was also raised to £11,000 next year, rising to £12,500 by 2020. Therefore people working 30 hours a week on minimum wage will not pay income tax.

There were significant changes to the tax credits and benefit system.

  • Working-age benefits are frozen until 2020, including tax credits and Local Housing Allowance
  • The Household Benefit Cap was reduced to £20,000, outside London
  • Tax credits and Universal Credit limited to two children, (affecting those born after April 2017)
  • Rents in social housing will be reduced by 1% a year for the next four years
  • Social housing residents who earn more than £30,000 a year will have to pay a higher rent from April 2017 – called Pay to Stay

Although not part of the Budget, the government and housing associations are working together to extend the Right to Buy to housing association homes. This scheme will give eligible residents the chance to buy their home at a discounted price.