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Receiving benefits? How the Budget affects you

Benefits and welfare measures were a big topic in Wednesday’s Budget, and if you receive any, such as Tax Credits, Universal Credit or Housing Benefit, you may be wondering how this affects you. Will you be better or worse off, and what does it all mean?

Firstly, there’s time to plan ahead – any changes won’t kick in until April 2016 at the earliest.

Here, we help to outline the main elements and steps you can take.

Changes to benefits explained

Household benefit cap

The household benefit cap is to be reduced from £26,000 to £23,000 in London and £20,000 outside London.

This cap refers to the total amount of working-age out of work benefits families can receive annually. 

So, for example, if you and your partner are both unemployed and have children, this would be the maximum amount you can claim between you for benefits such as tax credits, Jobseeker’s Allowance or Housing Benefit.

When this cap comes into play has not been decided yet.

Working age benefits

Working age benefits, such as Job Seeker’s Allowance and Employment and Support Allowance will be frozen for four years. This means the amount you get won’t increase in this time.

These freezes don’t include non-means tested disability benefits.  

Maternity Allowance, maternity and paternity pay and sick pay are also not included. Rises are automatically paid each April for these benefits.  


Child Tax Credits

Child Tax Credits are paid to top up your income if you are responsible for children. There will be changes to how you claim them starting in April 2017.

From this date, if you are making a new claim, support will be limited to the first two children, unless you have a multiple birth.

Disabled children are protected and you will still be able to claim the disabled child premium for any of your children who are eligible to get it.

If you are already claiming Child Tax Credits and have more than two children, you won’t be affected by the changes.

Universal Credit

From April 2017, if you are making a new claim for Universal Credit, support will be limited to the first two children unless exceptional circumstance exist such as a multiple birth and the first child premium will no longer be available.

If you are already claiming UC, you probably won't be affected by the changes.

The income threshold, which is the maximum amount of household income you can have in order to claim full Tax Credits is also falling from £6,420 to £3,850 per year.  This doesn’t mean you can’t receive it if you earn more than this, though!

Disability support

Employment and Support Allowance (ESA) is paid if you can’t work or only work a few hours a week because of sickness or disability.

From April 2017, new claimants who are placed in the ESA Work-Related Activity Group will receive the same rate as people looking for work and claiming Jobseeker’s Allowance or Universal Credit.

If you already claim ESA, you will be unaffected. 

Housing support

In a further blow, there will also be a four-year freeze in Local Housing Allowance rates. This means that if you’re renting privately and entitled to support with housing costs and your rent goes up, you may have to find the difference from your own pocket.

However, if you rent from a social landlord i.e. you live in a council house, or housing association property, rents will be falling slightly, so you will pay a little less each month.

Tenants on higher incomes in social housing (over £40,000 in London and over £30,000 outside London) will also be required to pay higher rents, close to market rate, or near market rate.

Furthermore, from April 2017, young people aged 18 to 21 who are out of work and make a new claim for Universal Credit will not be automatically entitled to housing support.

However, there will be some exceptions for vulnerable people who can’t live with their parents and for those who were in work for at least six months before making a claim.

What do you think?

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  • ELEANOR TAGGART / 18 March 2016

    What will happen to anyone over 60 receiving DLA after the budget changes

  • ELEANOR TAGGART / 18 March 2016

    What happens to over 60s in the new DLA benefit after changes

  • Rosemarie / 16 March 2016

    It is the first time I have visited this blog and found it very informative. As someone who has worked all their lives and paid my taxes in full and never ever received benefits. Now in my later years I have become disabled and have had to. I appreciate that it's nothing to do with anyone else but circumstances. So I take offence as we are not all scroungers

  • Inga / 1 November 2015

    What will happen if there is a family breakdown after April 2017 and the family have more than 2 children? Changing from claiming tax credits as a couple to claiming as a single person counts as a new claim. Would that single parent then only be entitled to money for the first 2 children?

  • Mr David horton / 20 August 2015

    OAP on pension plus a compensation allounce also rent and council tax benifits

  • Dismayed / 9 August 2015

    my concern is that ..... where do I start!? Punishing, degrading and indiscriminate measures are already in place across the board and it would appear they are only going to get worse, not better. There seems to be an assumption that people are "guilty" until proven "innocent". It is creating a climate of fear in this country and abusive ignorance, as demonstrated by one of the other posters. The gutter press have a great deal to answer for in fuelling and inciting such hideous distortions of the truth. The real culprits, of course, go unpunished - i.e. the bankers!

  • Alan Hearn / 3 August 2015

    It's not possible to comment on the Tories AND be nice!

  • disability is not my life / 27 July 2015

    WILL WORKING MAN not every one on DLA or any other disability benefit "does nothing to earn it" Why should we have to suffer through life? As a disabled person people like you make me sick. I shouldnt have to justify my way of life to you or anybody else. Its bad enough having people tell me that i'm taking liberties when my health affects my day to day life withough having some one like you who knows nothing trying to make me feel like a beggar and a scrounger. I JUST WANT TO LIVE A "NORMAL" LIFE is that too much to ask in todays society?

  • Peter Jenkins / 27 July 2015

    I agree with most of the changes however I feel all benefits should be means tested, this will make sure that the people who need it will receive it and people who do not wont, in the case of pensioners I feel that those who have had the common sense to save a little for their old age should not be penalised and some of the savings should not be counted in the means test. I also think the £200 heating allowance should be paid direct to the energy company and anyone earning £40,000 or more should not receive it

  • Lonceny / 26 July 2015

    Hi I'm a refugee in London from guinee and i have been granted my leave to remain in the UK . The issue I am trying to bring here is that the system grant you a leave to remain and you have zero assistance to take any small qualification from the job centre I have been going there asking for help to train myself so I could go back to work after my accident two years ago but all they good at doing to claimants is to make us feel like begers and criminals . I don't think it is a fair system at all out there . I have been on esa because of my accident , what do I do at this point to find a job cos I can't do my previous job . I want a new career but I have not been getting much support instead I have to wonder around in a country that I don't think is giving me enough support but decided to grant me . And all you read and hear is foreigners just here to claim benefit that's not true we only here to better our lives so please help us to achieve that .

  • WILL WORKING MAN / 26 July 2015

    i work 50 hours a week on the mininum wage i wish i had £20000 a year in wages anyone on benefits including DLA should try living on the mininum wage and as for people on DLA WHO GET A FREE TOP OF THE RANGE CAR TO DO THERE SHOPPING IS THE BIGGEST WASTE OF TAX PAYERS MONEY EVER A DLA CAR SHOULD BE THE SAME MODEL AND COLOUR AS I KNOW MANY THAT ARE USED AS FOR TAXIS WAKE UP DHSS AND SORT OUT THE FRAUDSTERS NOT THE PEOPLE WHO ARE OUT WORKING

  • KEVIN / 26 July 2015

    Hi there I am on support group income related esa how will it effect me,cheers K

  • Linda Breary / 26 July 2015

    My elderly mum is 82 years old. When her husband died she lost her home due to equity release. She could have stayed there until she died but could not afford to maintain or heat it. She has now to live in rented accommodation on pension credit. If the landlord puts up the rent she can not afford to do the one thing that gets her out of the house, bowls once a week. I think its disgusting that pensioners on benefit are treated this way. They have paid their dues during their working life. When they reach pension age living should not be a constant struggle.

  • Sabran / 26 July 2015

    I was made redundant in May of 2011 and l had to go in and sign up for 6 months(I felt like a criminal) couldn't wait until I could stop going into my local job centre. I now need assistance as I am all spent with my finances, would I be entitled to anything? I will be 60 in about 10 days time. Please advice, thank you

  • Betty / 26 July 2015

    Thank you for shielding more light on this benefit it is much clearer now

  • Suaad / 26 July 2015

    Thank you so much fore the information

  • Bashir Hassan / 26 July 2015

    Thank you very much it's very useful information
    and your advice is appreciated

  • Shona Haley / 26 July 2015

    Most clear and concise break down of the changes that affect us,especially the sick and disabled.