The new tax year starts on April 6th 2020, and will see changes to Universal Credit, State Pension, and other benefits. On top of this, drastic changes have been announced to the welfare system thanks to coronavirus. Why is changing?
Working Tax Credit increase
Another coronavirus cash boost will go to Working Tax Credit. The basic amount is £1960 a year, and this will increase by £20 per week on top of the inflation uprating. This applies to existing claimants, and will last for a year.
Working Tax Credit has been replaced by Universal Credit for most claimants. New claims for Working Tax Credit can only be made by those who get the severe disability premium, or are entitled to it; or those who received or were entitled to the severe disability premium in the last month, and are still eligible for it.
Benefit freeze ending
April 2020 sees the end to the benefit freeze. MPs apprised a rise of 1.7 percent for most welfare payments, in line with inflation. There have six separate benefit cuts made by the government since 2010 – with Child Benefit the first to be announced as being frozen.
Since April 2016, there has been a freeze in working age benefits which affected Universal Credit, Jobseeker’s Allowance, Income Support, Housing Benefit, Child Tax Credits, Working Tax Credits, Child Benefit & nearly all aspects of Employment and Support Allowance. All of these will see a boost from April 6.
The freeze did not apply to disability benefits, including Personal Independence Payment, Attendance Allowance, Disability Living Allowance, the disability elements of Tax Credits, and the support group component of Employment and Support Allowance.
Maternity Allowance, Statutory Sick Pay, Statutory Maternity/Paternity Pay, Statutory Shared Parental Pay, Statutory Adoption Pay and benefits for carers were also not affected.
National Minimum Wage and National Living Wage increase
Nearly three million employees will enjoy a pay rise of up to 6.5 percent because from April, the National Minimum Wage – for workers aged 24 and under – is rising.
The details are:
Apprentices – a 6.4 per cent increase from £3.90 to £4.15
Under 18s – a 4.6 per cent increase from £4.35 to £4.55
18-20 year olds – a 4.9 per cent increase from £6.15 to £6.45
21-24 year olds – a 6.5 per cent increase from £7.70 to £8.20
The National Living Wage is higher than the minimum wage, and workers can get it if they are 25 and over. Workers on the National Living Wage will be entitled to £8.72 per hour (or £15,870 a year) from April 6, a rise from the current rate of £8.21 (equating to £14,942 a year).
In practice, employees who work 35 hours per week would receive an increase of around £930 over a year.
Minimum income floor lifted
Another change due to coronavirus. Self-employed people who are claiming Universal Credit and are required to stay at home or are ill as a result of coronavirus will not have the minimum income floor applied while they are affected.
The minimum income floor will be temporarily relaxed from April 6. This change applied to all Universal Credit claimants.
Usually, the DWP assumes claimants are earning the same amount as someone in paid work. This will usually be what someone of their age would earn if they worked at the National Minimum Wage for the number of hours they are expected to work or look for work. That’s called the Minimum Income Floor.
Universal Credit will not normally make up the difference for those earning less than the minimum income floor, and they would need to look for additional work to top up their income. However, this has now been abolished indefinitely to help people during the coronavirus outbreak.