What is the Universal Credit taper rate?

THE Universal Credit taper rate limits the amount of earnings those claiming the benefit can keep – and it's been hitting cash-strapped Brits.

The government has been put under pressure to help hard-up workers out and cut the taper rate – but what exactly is it?

We explain all you need to know – and whether the taper rate will be cut in today's Budget announcement.

What is the Universal Credit taper rate?

The Universal Credit taper rate taxes Brits 63p in the pound on anything they earn over their base level of benefits.

It kicks in once claimants are earning above their Work Allowance – which is the amount of money you can earn before your Universal Credit payments are subject to being cut under the taper rate.

So you'll lose 63p of your maximum Universal Credit award payment for every £1 you earn over your Work Allowance.

Your Work Allowance if affected by whether you claim the Housing Costs element of Universal Credit.

The monthly Work Allowance is set at £293 if your Universal Credit includes Housing Support, and £515 if it doesn't.

If you're subject to the taper rate, then your payments will be deducted automatically.

The taper rate puts thousands of claimants off applying for better paid jobs or taking on more hours.

The Sun has been calling for the government to increase the allowance and reduce the taper rate, as part of our Make Universal Credit Work campaign.

Will the taper rate be cut?

The government has been under pressure from charities and organisations to cut the punishing taper rate and allow claimants to keep more of their cash.

It is rumoured that Rishi Sunak will potentially slash the taper rate in his Budget today.

It's understood that the DWP's main spending review ask – to cut the taper rate down to 60p – will be backed by Rishi's team.

This will help to soften the blow for the lowest paid ahead of a tough winter while families are being battered by soaring energy, food and fuel costs.

Should the taper rate be slashed, 1.7million households will benefit and be better off, according to The Joseph Rowntree Foundation.

It will also help to give claimants more support after the £20 weekly uplift to Universal Credit payments was slashed earlier this month.

The government introduced a £20 a week raise to help claimants through the coronavirus pandemic, but it was scrapped on October 6.

Joseph Rowntree Foundation estimated that 5.5million families lost out on the axed £1,000 boost a year, with £440million in total wiped off monthly incomes.

 

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