There are lots of ways to make money fast, but just how...
What are the 2016 benefit changes announced in the Autumn Statement?
UPDATE: This article was published in November 2015. Make sure you’re up to date with the 2016 benefit changes and how they may affect you.
If you’ve been worried about the effects of the changes to tax credits due in the spring, then you’ll hopefully be breathing a sigh of relief today. The Chancellor George Osbourne announced a U-turn on the proposed changes in the Government’s Autumn Statement yesterday. But what else was announced during his 80-minute speech?
The Government’s Autumn Statement and Comprehensive Spending Review isn’t a page turner. But it affects the finances of a lot of people up and down the country. That’s why we asked our Policy team to try and explain the changes in language that even the MoneyAware team would understand.
At a glance it looks like this…
Potentially positive for you:
- Reversal of tax credit cuts
- Pension payments will increase
- Extension of the Warm Home Discount to 2020-21
Potentially negative for you:
- Changes to Universal Credit (UC) announced in the Summer Budget will still go ahead from 2016-17
Other things to be aware of:
- There are changes to benefits paid to the self-employed
- There are some small changes to JSA ‘conditionality’
Let’s look at these in more detail…
There’s no reduction in tax credits
The proposed changes we detailed in our Benefits Changes 2016 article in the summer are not going to go ahead in 2016. You may have picked up from the news yesterday that this went further than most were predicting, but with criticism from within their own ranks, it was likely that something would be announced by the Government. Pundits were a bit surprised at the Chancellor saying, in essence, “Let’s call the whole thing off”.
- Currently people’s tax credits start to be reduced if they earn more than £6,420 (the income threshold). The government was proposing to decrease this amount to £3,850 meaning everyone earning above would get less. However, the government has decided to keep this at £6,420.
- The rate that tax credits decrease once you start earning above the income threshold is also staying the same, at 41% (instead of being raised to 48%. So for every £1 extra you earn there’ll be a 41p reduction in your tax credits
However, there’s still a reduction proposed in Universal Credit
The changes to Universal Credit announced in the last Budget (also detailed in our Benefits article linked above) will still go ahead in 2016-17. This means that the equivalent to tax credit income thresholds in Universal Credit, known as work allowances, will be reduced to:
- £4,764 for those without housing costs
- £2,304 for those with housing cost
- Removed altogether for non-disabled claimants without children
The impact of this is unknown at the moment, especially because there will be two systems that people could be accessing as Universal Credit is rolled out. Some will still be in the current benefit system and some will be transferred to or be new claimants of Universal Credit.
Changes in pensions in 2016
These changes were widely expected, but confirmation came yesterday that…
- In April, the basic State Pension will once again be increased by “the triple lock”, meaning a full basic State Pension will rise to £119.30 a week, an increase of £3.35
- From April, those reaching pensionable age will receive a new, ‘single-tier’ pension with a starting rate of £155.65. 35 ‘qualifying years’ (of National Insurance contributions or credits) will be needed for the full amount. Those with fewer than 35 qualifying years will receive a pro-rated amount (subject to them having at least ten qualifying years).
The Warm House Discount scheme continues
The government will extend the Warm Home Discount to 2020-21 at current levels of £320 million a year, rising with inflation. Find out if you qualify for Warm Home Discount.
Changes to benefits for self-employed people who claim Universal Credit
The ‘minimum income floor’ is the amount the Department for Works and Pensions normally assumes you’re earning if you’re self-employed and claiming Universal Credit. If you earn less than this minimum income floor you won’t get any more Universal Credit to make up the difference.
Changes in the Autumn Statement mean that self-employed people who are earning nothing or very little on a monthly basis will be assumed to be earning a higher amount than previously, and their Universal Credit award will be reduced accordingly.
Changes in Jobseekers allowance (JSA) in 2016
- Jobseekers (on JSA) will now be required to attend the jobcentre weekly for the first 3 months
- There was also an announcement of an increase in funding to help people disabilities and health conditions to get work and remain in work
More on benefit changes
There were many other changes announced in the Autumn Statement but we think that those listed above were the main ones that could impact your day-to-day life.
However we’d encourage you to read our Benefit Changes 2016 for more details on the changes announced in the Budget earlier this year. We’ve updated it in light of yesterday’s announcements.