Welfare Benefit Changes 2016

As the Government’s welfare reforms gather pace, a host of changes are due to be introduced during 2016. The Government aims to save £12 billion on welfare bills by 2019-2020 and, although they have met with some resistance, most notably, the recent defeat in the House of Lords over the proposed changes to Tax Credits, the vast majority of changes are being introduced.

April 2016 will see the introduction of the Single Tier Pension, which will replace the basic State Pension and State Second Pension for all women born on or after 6 April 1953 and all men born on or after 6 April 1951. Although this will increase the amount of basic State Pension most people are expected to receive, there will be losers as the Government changes its policy on entitlement.

As the rollout of Universal Credit gathers momentum, Work Allowances, the amount you can earn without your benefit being affected, are being reduced alongside an increase in help with childcare. This will affect non-disabled, childless claimants the most as they will lose all work allowances, although all claimants may lose out to some degree.

Working age benefits and Tax Credits will be frozen for four years. Pensioner benefits are excluded from the benefit freeze. Disability benefits including Personal Independence Payment, Attendance Allowance, Disability Living Allowance and Employment and Support Allowance (Support Group), along with the disability-related elements of Tax Credits and statutory payments will be uprated in line with the Consumer Prices Index (CPI). As the CPI fell in the year to September 2015, these benefits will not be increased in April 2016.

The family premium element within Housing Benefit will be withdrawn for new claims/births after 1st May 2016, and backdating is being reduced to four weeks for new claims from working age claimants.

The Tax Credit income disregard will be reduced from £5,000 to £2,500.

Autumn 2016 will also see the benefit cap reduced to £23,000 for London claimants and £20,000 for the rest of the UK. You are exempt from the cap if you or anyone in your household (a partner or dependant child) is getting disability benefits including DLA, PIP, Attendance Allowance or are allocated to the Support Group of ESA or are entitled to Working Tax Credit. You will also be exempt if anyone in your household is entitled to Carer’s Allowance, the carer’s element of Universal Credit or Guardian’s Allowance.

2017 will see some the of the biggest and most controversial changes. New ESA claimants in the Work-Related Activity Group will not receive the additional component; there is increased conditionality for Universal Credit claimants aged 18 to 21 and lone parents with a youngest child aged 3 or over; anyone starting a family will no longer be eligible for the Family Element in Tax Credits nor the first child premium in Universal Credit.

If you require further assistance or advice with regards to welfare benefits, please contact Phil Runciman, our Welfare Benefits Adviser.