Chart shows impact of Universal Credit cuts across UK
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A third of families on a low income are currently struggling to make ends meet, according to figures from anti-poverty charity the Joseph Roundtree Foundation.
Nearly six million British people are claiming Universal Credit because they are either out of work or on a low income, according to latest statistics from the Department for Work and Pensions (DWP).
More than a third of these (39 percent) are in work, yet considered to be on an income that isn’t enough to live on.
They can claim Universal Credit so that they can afford to work and pay their bills but understanding how much they will be paid at the end of the month may not be easy.
It’s particularly confusing for anyone who might be claiming benefits for the first time because of the COVID-19 pandemic – around three million people are thought to be in this position.
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What is the Universal Credit earnings taper?
The Universal Credit earnings taper is a reduction to how much Universal Credit a claimant receives based on their earned income.
How much Universal Credit someone will receive is dependent on their earnings and their circumstances but the good news is there is no limit on the amount of hours they can work.
Some people will be able to keep all their earnings – but those who are earning more will see their payments gradually reduce – for every £1 they earn over their allocated work allowance their payment reduces by 63p.
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People who can work and don’t have responsibility for a child will not qualify for a work allowance.
However those who do have children, or their ability to work is affected, will be entitled to this.
The work allowance is currently set at £515 a month, however if they also receive benefits for housing, it’s reduced to £293 per month.
After that it reduces by 63 pence for every one pound someone earns while working.
To attempt to cut through the confusion, the Government website sets out an example:
An individual has a child and gets money for housing costs included in their Universal Credit payment. This person is in work and earns £500 during their assessment period.
Their work allowance is £293. This means they can earn £293 without any money being deducted.
For every £1 of the remaining £207 they get, 63p is taken from their Universal Credit payment. So £207 x £0.63 = £130.41.
This means they earn £500 and £130.41 is deducted from their Universal Credit.
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Charities like the Joseph Roundtree Foundation and Turn2Us are campaigning to raise awareness of benefits people can claim – it estimates over £15billion goes unclaimed every year.
That works out at £2,900 per family which could make a massive difference to those who are struggling financially.
As the amount someone can claim is largely affected by individual circumstances, it is a good idea to input details into a benefits calculator for a true figure.
The Government website has a handy benefits calculator to help people work out whether it is worth making a claim.
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