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Universal credit and state benefits

ICAEW Tax Faculty provides analysis of the announcements relating to universal credit and state benefits in the Autumn Budget 2017.

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Universal credit

The government responded to the concerns about universal credit by announcing the following changes:

  • The seven-day waiting period will be removed from February 2018, so that entitlement to universal credit will start on the first day of the application (though there will still be a wait of at least four weeks before payment is due).
  • Those already on housing benefit when they make a claim to universal credit will continue to receive their award for the first two weeks after they claim. This change will be introduced in April 2018.
  • An interest-free advance of up to a month’s worth of universal credit, payable within five days, will be offered to those who need it and who have an underlying entitlement to universal credit. The recovery period for these advances will be extended from the current six months to 12 months. This change will be in place in January 2018.
  • It will be easier for claimants to have the housing element of their universal credit award paid direct to their landlord.
  • The roll-out of universal credit will slow down between February and April 2018. Roll-out is not now expected to be complete until December 2018 (rather than September 2018 as was envisaged when the plans were last updated).

There was no announcement of any change to the ‘minimum income floor’ rules that apply to the self-employed and the concerns about the design of universal credit for the self-employed remain, as highlighted in a report by the Low Incomes Tax Reform Group Self-employed claimants of universal credit – lifting the burdens.

State pension and pension credit

The basic state pension will be increased by the triple lock. The rise in April 2018 will be 3%, a cash increase of £3.65 per week for the full basic pension.

For the poorest pensioners there will be an increase to the standard minimum guarantee in pension credit to match the cash rise in the basic state pension.

The full new state pension will also be increased by the triple lock, rising by £4.80 per week.