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Autumn Budget - UC changes ahead

Changes ahead - what was announced in the Autumn Budget?

 

All 18 - 21 year old Universal Credit claimants will receive the Housing Costs Element they are entitled to.

Back in 2017 the Government introduced a rule that prevented many single, childless Full UC service claimants from getting a Housing Costs Element in their UC even where they were living in rented property and liable for rent.

Although many young people were excluded from these rules, there were still a small number who have been affected and the government came under a lot of criticism.

Back in Spring 2018 the Government announced that they would be reversing the rule - we now have a better idea of when this will be
!

This week's Budget finally confirmed that these the rules will be abolished in December 2018 (exact date not yet known).

Q: What happens if I allocate a tenancy to a young single person age 18 - 21 before the rules change?
A: If the young person was not previously getting help with their rent and they make a claim for UC, then they will only qualify for help with their rent ie a Housing Costs Element in their UC if they fit one of the special categories of claimants who can get help. There is a long list so it is worth checking - see this page of our website for details. Once the Regulations change, all young single UC claimants can qualify for a Housing Costs Element.

 

New 'gateway condition' to be introduced from Jan 2019 to prevent loss of Severe Disability Premium

If you've attended one of our training courses on Universal Credit you'll be aware of the huge drop in income some claimants can experience if they make a new claim for UC.

Many claimants lose out for many different reasons, but the biggest loss is for some disabled claimants who were entitled to have the Severe Disability Premium included in their assessment of IB-JSA, IR-ESA, IS, HB.


This is because there is no equivalent in Universal Credit, meaning for some claimants, a loss of up to £69 a week income!

From January 2019* anyone who has the Severe Disability Premium included in their Income Related Employment and Support Allowance, Income Based Jobseekers Allowance, Income Support or Housing Benefit will not have to make a claim for Universal Credit.
(*exact date not yet known) 

Instead, they will be able to remain on the legacy benefit system – and will therefore retain their Severe Disability Premium.

Eventually they will need to move onto UC ie they will be ‘manage-migrated’ onto UC, but they will then receive ‘transitional protection’, so that they do not see an immediate loss of income at the point of moving onto UC. 

Q: What about our tenants who are already on UC and have lost out? How can we help?
A: Many of those who have already moved onto UC under ‘natural migration’ and who have ended up worse off due to the loss of the Severe Disability Premium will also receive protection – see website for more details - note: there are only draft Regulations at the moment as to who will receive this protection and how much.
What you can do is start to keep a list of those who have lost their Severe Disability Premium through going onto UC. You will then be able to contact them as soon as the Regulations are confirmed about what they will need to do to ensure they receive any payments they are entitled to.
Be aware that certain change in circumstances will mean that they would no longer qualify for the protection (eg: taking on a partner, lost their PIP daily living; someone getting paid Carers Allowance or the Carer Element of UC in respect of looking after them). More in our Briefing.

Q: I have a tenant currently on Housing Benefit who is wanting to move to a new home in a different Local Authority and in a Full UC service area meaning he will have to claim UC. He will lose his Severe Disability Premium and be significantly worse off. Should I persuade him to stay where he is until January?
A: It will have to be your tenant’s choice and will depend on his circumstances. Give him all the information ie how much his entitlement will drop, the planned protection and what changes in his circumstances may mean he's not entitled to it (you can work out what his UC entitlement will be using our UC calculator). See Q & A above too.
 

 

More help for some working UC claimants.....

The Government has come under increasing pressure over the last couple of months to ensure that those working claimants currently getting Tax Credits, when they are migrated onto UC, are no worse off.

And there have been many stories in the press about working UC claimants really struggling.

So this week's Budget announced three changes that will help some UC claimants.


More earnings disregarded for some
From April 2019 the Work Allowance for claimants with dependent children and those where they or their partner have a Limited Capability for Work, is increasing by £83.33 per month. This means that working parents and those with a Limited Capability for Work where they (or their partner) are working will be better off by up to £52.50 per month.
Unfortunately, the government has kept the Work Allowance for other claimants ie those without children or who have not been found unfit for work - at £0 – meaning their UC is reduced by 63% of the whole of their net monthly earnings.

Q: What is the Work Allowance?
A: It's like an "earnings disregard". It's an amount of earnings that the claimant keeps without it affecting their UC entitlement. 

Q: How can we ensure that a claimants’ UC award is correct, ie that their earnings are reduced by the appropriate Work Allowance?

A: Ask them to logon to their UC account and show you the award notification on their UC account. It will give the net earnings figure followed by the amount taken into account in the calculation. Subtract the Work Allowance that should apply in their case from the first figure and then multiply the result by 63%. If the second figure on their award is higher than this, there’s something wrong. They need to request a Mandatory Reconsideration on their UC journal - asking that the DWP review the Work Allowance that is included in the award.

Q: What about people who have been found unfit for work but there’s no Limited Capability for Work Element included in their UC award (ie because their period of incapability for work started on or after 3rd April 2017)?
A: There should still be a Work Allowance – it’s not related to whether or not they get the Element, but the fact that they have been found to have a Limited Capability for Work.
 

The minimum income floor for self-employed claimants
This can affect those UC claimants who are gainfully self-employed and in the 'all work requirements' conditionality group.

At the moment, those UC claimants who started their business within the previous 12 months of making their claim for UC (or who start gainful self-employment whilst on UC) are allowed a 12-month ‘start up’ period - a period when the Minimum Income Floor will not be applied.

During this period the DWP use their actual earnings and expenses when working out their UC entitlement. However when the 12 months are up the Minimum Income Floor rules will then be applied. This means that they are treated as earning at least the minimum wage / living wage for someone of their age for the number of hours the DWP expect them to work, even if they actually earn less.

However, from July 2019 any self-employed claimants who are ‘manage-migrated’ onto UC will automatically have a 12 month ‘grace period’ until the Minimum Income Floor rule starts to apply, regardless of how long they have been trading. 

And from September 2020 any self-employed claimants who 'naturally migrated' onto UC (ie. where a change in the claimant’s circumstances triggers the need for them to claim UC) will automatically have a 12 month ‘grace period’ until the Minimum Income Floor rule starts to apply again regardless of how long they have been trading.

More information on self employment on this page of the website.

The Surplus Earnings Rule
The idea of the Surplus Earnings Rule is that when someone earns a large amount or gets a large bonus, they should make those earnings last for more than one month.
The rule was introduced in 2017, however a concession was made that meant it would not affect so many claimants.
The Government has announced that this concession will continue until April 2020.
So until April 2020 the point at which this rule kicks in will remain at the amount of earnings at which the claimant ‘floats off’ UC plus £2500. From April 2020 it will drop to the original proposed amount, ie the earnings at which the claimant ‘floats off’ UC plus £300.
Whilst the threshold remains so high, very few claimants will be affected by this rule, however from April 2020, when the threshold reduces, there is potential for many claimants to be affected, including those who receive two four-weekly or monthly wages within one UC Monthly Assessment Period.

Find out more about the surplus earnings rules on our website here.

 

Changes to deduction level and re-paying New Claim Advances

The maximum that can be deducted from a claimant's UC award was originally set at a level much higher than if the claimant had been on legacy benefits - causing hardship and leaving many with very little to live on.


 Deductions from Universal Credit
From October 2019 the overall maximum deduction rate for all deductions will reduce from an amount equal to 40% of the claimant's Standard Allowance to 30%.
 

  Standard Allow 30% 40%
  Single under   25 £251.77 £75.53 £100.71
  Single
  25+
£317.82 £95.35 £127.13
  Couple both 
  under 25
£395.20 £118.56 £158.08
  Couple both     25+ £498.89 £149.67 £199.56

 

Q: How will this affect our receipt of Third Party Deductions for rent arrears?
A: As the overall reduction rate reduces, it may be more likely that you will receive the payment at an amount equal to 10% of the claimant's Standard Allowance rather than the 20% rate. This is because deductions for rent arrears at 20% are further down the priority list than deductions for rent arrears at 10%.
 

Q:  Will deductions for sanctions be affected by this change?
A: It appears not - all sanctions except the lowest level are taken at an amount equal to 100% of the standard allowance (or 50% of the couple standard allowance).
 

Repayment of New Claim / Benefit Transfer Advances

From October 2021 the repayment period for New Claim Advances and Benefit Transfer Advances can be extended from 12 months to 16 months.
There is no further information about this so we do not know under what circumstances the DWP would agree to extend the recovery period, or whether those already repaying an Advance when this rules takes affect would be able to apply. (Changes of Circumstances Advances currently have a 6-month repayment period and Budgeting Advances are repaid over 12 months but sometimes over 18 months – it is not clear if the budget announcement also refers to these types of advances).

 

 

New two week run-on of IS, IB-JSA and IR-ESA - but not until
July 2020!

It is widely accepted that where a claimant moves from Income Support, Income-Based Jobseekers Allowance or Income-Related Employment and Support Allowance onto UC that the 5 week wait until they receive their first UC payment causes hardship.

Back in April 2018 the Government introduced a two week HB run-on - where the claimant's HB was ending because they had made a claim for UC.

 

The Government have this week announced that they will now be introducing a two-week run-on of Income Support, Income Related ESA or Income Based JSA for these claimants but not until July 2020.

We expect this to work in a similar way to the Transition to UC Housing Payment (two-week run-on of Housing Benefit) which has already been introduced. The extra income will help with adjusting to monthly budgeting.

For more information on the Transition to UC Housing Payment click here.

 

Other benefit announcements.....

Housing Benefit incorporated into Pension Credit
The Budget confirms that the Government is still planning to stop HB for Pension Credit age claimants (unless living in 'supported housing') and will transfer that help to Pension Credit: this change has been delayed until October 2023.

Funding for Supported Housing
The Government announced back in August that funding for supported housing would remain within the welfare system. This has been confirmed in this Budget. We are still awaiting details regarding what will be classed as 'supported housing'.

Delay to 'managed-migration'
The Budget also confirms that the 'managed-migration' of legacy benefit claimants to UC will be delayed. We are expecting some pilots to start in July 2019, with the process starting in January 2020.

Two Child Limit (as previously announced)
From November 2018 a Child Element can be included in a Child Tax Credit or Universal Credit award where a first or second child has been adopted or is being looked after by the claimant under a kinship care / non-parental care arrangement.The Government have this week announced that they will now be introducing a two-week run-on of Income Support, Income Related ESA or Income Based JSA for these claimants, but not until July 2020.