28 October 2021
Autumn Budget 2021 announcements
Here we provide a brief round-up of some of the Chancellor’s announcements in his Budget on 27 October 2021
- The taper rate is currently set at 63%, meaning for each £1 of earned income (after tax/NI/pension contributions), the maximum UC award is reduced by 63p. The Chancellor announced that the taper rate will reduce to 55% from 1 December 2021, so that claimants will be able to keep more of their earnings.
- Work allowances are the amount of earnings a claimant can keep before the taper is applied. Claimants with children and/or with limited capability for work are entitled to a work allowance, either the higher rate (no housing costs) or the lower rate (with housing costs). The Chancellor announced that the work allowances would be increased by £500 a year from 1 December 2021.
- The surplus earnings threshold will remain at £2500 until April 2023, and thereafter it is scheduled to revert to £300.
- The managed move of legacy benefit claimants to UC has been pushed back to an expected completion date of March 2025 (previously September 2024).
National Minimum Wage
Rates for the national living wage (and national minimum wage) have been uprated. The baseline rate, for those 23 and over, will increase from £8.91 per hour to £9.50 per hour from 1 April 2022.
The other NMW rates will be increased from 1 April 2022:
- the rate for 21 to 22 year olds from £8.36 to £9.18 per hour
- the rate for 18 to 20 year olds from £6.56 to £6.83 per hour
- the rate for 16 to 17 year olds from £4.62 to £4.81 per hour
- the rate for apprentices from £4.30 to £4.81 per hour
- the accommodation offset rate from £8.36 to £8.70 per hour
It was confirmed that in May 2021 the government legislated to ensure all child benefit claimants with children in their last year of full time non-advanced education would be paid child benefit up to 31 August, if exam cancellations due to COVID-19 would have otherwise prevented them from being entitled to three months of child benefit payments
New style Employment Support Allowance
The current easement which allows new style ESA to be claimed by those affected by Covid-19 from day one of absence from work (instead of day 8, under normal rules) is extended until 24 March 2022
Arrivals from Afghanistan
The Government confirmed day 1 access to benefits for those arriving to the UK from Afghanistan –individuals coming to the UK from Afghanistan, including those under the Home Office resettlement schemes, are eligible for Child Benefit and DWP income related benefits from their first day in the UK
The Government’s plans to create a new housing element of Pension Credit, replacing pensioner Housing Benefit, are now intended to take effect in 2025.
The full Autumn 2021 Budget documents are available on the GOV.UK website