The key changes and reforms to Social Security benefits
Child Benefit
From April 2024, the Department for Work and Pensions (DWP) will increase the High Income Child Benefit Charge (HICBC) threshold from £50,000 to £60,000.
The rate at which the HICBC is charged will also be halved so that Child Benefit is not withdrawn in full until an individual earns £80,000 or more.
The HICBC was first introduced from January 2013. The previous thresholds had meant that if the person receiving child benefit had been earning between £50,000pa and £60,000pa, then they would have been liable to pay tax on their child benefit, resulting in it no longer having any cash in hand value.
The view is that Child Benefit provides much needed financial support to working families. It provides an income to help parents pay for the costs associated with having children, meaning they can better balance work with looking after their children. However, the DWP consider that the way the HICBC presently operates, is unfair towards single earner families. The plan to end this unfairness is to administer the HICBC based upon household income rather than an individual’s income.
It is understood that as many as 170,000 more families will benefit from an award of Child Benefit under the new rules. Overall, the DWP estimates 485,000 families will gain an average of £1,260.00 in Child Benefit in 2024-25, as a result of these changes.
As things stand those with children who have high earnings can elect to claim Child Benefit and pay tax on it or claim Child Benefit but choose not to be paid it. In the latter case this would at least enable the claimant (or their partner) to be credited with a National Insurance contribution protecting entitlement to a state pension.
Information on changes to the High Income Child Benefit Charge - GOV.UK (www.gov.uk)
Universal Credit Budgeting Advance
Budgeting advances are a loan from the DWP. Applicants must be entitled to UC in order to access the budgeting advance. The standard maximum repayment period for a Budgeting Advance is to be extended from 12 months to 24 months. This change will apply to Budgeting Advances taken from December 2024 onwards and will reduce the monthly repayments on these loans, relieving financial pressure on low income households on Universal Credit.
A person can apply for a Budgeting Advance to help with expenses associated with the purchase of clothing, essential household furniture / household equipment, maternity needs or getting a job.
To qualify for a Budgeting Advance the applicant / their partner must have been receiving Universal Credit (or another equivalent benefit) for at least six months.
The minimum amount a person can borrow is £100. The maximum is:
- £348 if a person is single
- £464 if the person is a member of a couple
- £812 if the person has a child(ren).
How much Budgeting Advance may actually be awarded, depends on whether the applicant may be considered to be able to repay the loan and the amount of savings (if any) they have. Any savings over £1,000 will reduce the amount of loan provided.
Any Budgeting Advance is repaid by way of deductions from the person’s monthly Universal Credit payments. The first repayment deduction would normally be taken on the day they get their next Universal Credit payment.
A person can apply for a Budgeting Advance through their local Jobcentre Work Coach. Universal Credit advances - GOV.UK (www.gov.uk)
Budgeting advances are not to be confused with the Universal Credit Advance Payment, which people can apply for during the first assessment period of their UC claim whilst they wait for their first payment day. Since 12th April 2021 the maximum repayment for these loans has been 24 months. Universal Credit advances - GOV.UK (www.gov.uk)
Household Support Fund
It was announced that funding for the Household Support Fund (costing an additional £500 million) would be extended in England from April 2024 to September 2024 to enable targeted support to vulnerable households with the cost of essentials such as food and utilities, as inflation continues to fall. Get help with the cost of living from your local council - GOV.UK (www.gov.uk).
We are awaiting announcements on how the Household Support Fund will be distributed and managed for the 6 month extension period. Household Support Fund