Important update for anyone in receipt of Universal Credit and Working Tax Credits

Temporary uplift to Universal Credit extended for six months

On 3 March, the Chancellor confirmed that the temporary £20 uplift to the Universal Credit standard allowance has been extended for a further six months to September 2021. The uplift will continue to be paid automatically, so if you are a Universal Credit claimant you do not need to do anything further.

Additional support for Working Tax Credit claimants

It was also announced that eligible Working Tax Credit claimants will receive a one-off payment of £500 to provide continued extra support over the next six months. You do not need to apply for the new payment, but will be contacted by HMRC in April if you are eligible, with payment made by 23 April 2021.

You will be eligible for the payment if, on 2 March 2021, you receive:

  • Working Tax Credit payments
  • Both Working Tax Credit and Child Tax Credit payments
  • Child Tax Credit payments, and are eligible for Working Tax Credit but do not get a payment because your income is too high.

The Government also confirmed it will continue to treat Working Tax Credit claimants across the UK who have been furloughed, or who are experiencing a temporary reduction in their working hours as a result of Covid-19, as working their normal pre-Covid-19 working hours.

Universal Credit surplus earnings threshold

The Government will maintain the higher surplus earnings threshold of £2,500 for Universal Credit claimants until April 2022, at which point the threshold will revert to £300.

This means that if your monthly earnings are up to £2,500 over the amount where your Universal Credit payment stopped due to an increase in earnings, this amount will not be carried forward to the following month, and will not count towards future earnings. As a result, claimants can retain a greater amount of Universal Credit award.

Suspension of the Minimum Income Floor for self-employed Universal Credit claimants

It was also announced that the suspension of the Minimum Income Floor for self-employed Universal Credit claimants will continue until the end of July 2021. This will be gradually reintroduced from August, but work coaches will be given discretion to not apply it on an individual basis where they assess that claimants’ earnings are affected by Covid-19 restrictions.

This will be of benefit to self-employed Universal Credit claimants, as it means there is no assumption that the claimant is earning at least the equivalent of the minimum wage when their Universal Credit claim is calculated. Instead, those earning less than that level are assessed on actual income.

We are still awaiting further detail on what the ‘gradual’ reintroduction of the Minimum Income Floor will mean from August.

Universal Credit: debt deductions cap and advance repayments

From April 2021, the period over which Universal Credit advances (essentially loans) will be recovered will increase from 12 months to 24 months, while the maximum rate at which deductions can be made from a Universal Credit award will reduce from 30% to 25% of the standard allowance. These measures were previously due to be implemented from October 2021.

Our Family Benefits Advice Service is here to help

We know that the information above is complex, but our Family Benefits Advice Service can offer advice and guidance to anyone with questions around Working Tax Credits, Universal Credit or any other form of support with their childcare costs, such as Childcare Vouchers or Tax-Free Childcare. We know it’s a difficult time for families and we are here to help. Contact our advice helpline on 028 9267 8200 or email