The Universal Credit, benefits and pension changes coming into force next week

We’re just days away from the next calendar month – which itself signals the start of some significant changes in the UK.

Aside from the lighter hours and the country having essentially changed our timezone over the coming weekend, we’re also heading towards the next tax year.

Each year April offers changes to financial affairs across various sectors, in particular for those receiving benefits and pensions – who likely eagerly await news of whether payments will be increasing or not. 

Fortunately there are some positive changes coming into effect next month, including to Universal Credit payments and the National Minimum Wage.

These aren’t the only changes to benefits and welfare expected this year, with additional upcoming policies and increases scheduled for the coming months. 

It’s important to note that the aforementioned list is subject to government change and may experience some delay in implementation due to the ongoing situation regarding coronavirus. 

The benefit freeze

Perhaps the most significant benefits change coming into effect next week will be the end of the benefit freeze.

The four-year freeze was introduced by the Conservatives in April 2016 and has affected most working-age benefits and tax credits. 

It meant that payments have remained at the same value for almost five years – rather than increasing in line with the rising cost of living in the UK. 

The freeze, which was essentially a cap on benefits payments, will come to an end next month as confirmed by the Department for Work and Pensions in December 2019. 

Claimants receiving the likes of Jobseeker’s Allowance and Universal Credit will soon see payments increase by 1.7 percent – in line with inflation.

For example, those aged over 25 and on the standard allowance for Universal Credit will see their monthly payment increase by over £5 – equating to almost an additional £65 a year.

The change will also boost payments of Employment and Support Allowance, Income Support, Housing Benefit, Child Tax Credits, Working Tax Credits and Child Benefit.

And whilst this is likely cause for celebration for the 10 million people in the UK who in theory should have a higher income, some argue that this won’t necessarily be the case.

Think-tank the Resolution Foundation suggests that some families will be worse off because bills have risen over the last five years – whilst benefit payments have remained static. 

Such critics note that this gap won’t be resolved next month, as benefits will now rise in line with price – instead of increasing higher to make up for the past few years.

State Pension

The next change expected from the new tax year will affect those receiving the State Pension, whose payments are scheduled to increase by up to £343 a year.

From April 6, millions of pensioners should see a 3.9 percent increase in payments in line with average earnings. 

It means that those on the basic state pension rate will receive a weekly boost of £5.05 as payments will increase from £129.20 to £134.25. 

Those entitled to the full new-single tier state pension will benefit even further with an extra £6.60 in their accounts – when their weekly £168.60 payment rises to £175.20. 

Over the next year, state pension holders will receive between £262.60 and £343.20 more annually – making it the biggest pay rise for pensioners in almost a decade.

National Minimum Wage 

Almost 3 million workers are to benefit next month from a pay rise of up to 6.5 percent, which the Government dubbed the “biggest cash increase ever.” 

Announced in December 2019, it means that those on the National Living Wage and the National Minimum Wage can expect bigger paychecks from next month when the next tax year commences. 

Workers aged 25 and over on National Living Wage will therefore be entitled to an extra 51p an hour – a 6.2 percent increase – which will take their hourly wage up to £8.72. 

According to estimates, itt means that such employees who work 35 hours per week would receive an annual increase of £930. 

Similarly, the National Minimum Wage will increase by between 4.6 percent and 6.5 percent an hour for young employees – depending on their age. 

The news rates, which are scheduled to be introduced next month, will mean employees can expect a:

• 4.6 percent rise from £4.35 to £4.55 for under 18s
• 4.9 percent rise from £6.15 to £6.45 for 18-20 year olds
• 6.5 percent rise from £7.70 to £8.20 for 21-24 year olds
• 6.4 percent rise from £3.90 to £4.15 for apprentices

Parental Bereavement Leave and Pay

Next month will also see the introduction of the Parental Bereavement Leave and Pay law – scheduled to come into force in April.

This offers a new legal entitlement to two weeks’ leave for employees who suffer the death of a child under 18 – as well as for those who experience a stillbirth after 24 weeks of pregnancy.

Announced two years ago, this legislation is the “first law of its kind” in the UK and has been referred to by ministers and campaigners as an “important milestone” for those affected by the trauma of childhood mortality.

Through the law, employed parents will be able to claim statutory paid leave for this period – though this only applies to parents or carers who have been employed for a continuous period of at least 26 weeks prior to the death of the child.

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