Changes to the benefit system starting in April 2016
From April 2016, there will be a number of changes introduced to the benefit system that will affect single parent families in Scotland. Read on to find out how you might be affected.
The following changes will be implemented in April 2016.
Four Year Benefit Freeze
Income support, jobseeker’s allowance, employment & support allowance, housing benefit (applicable amounts), universal credit and individual elements of tax credits will all be frozen for four years from April 2016.
Disability elements/benefits are exempt from the freeze but as they are linked to the Consumer Price Index which has not risen, these elements/benefits will not increase this year.
Tax Credit In-Year Increases
The amount by which a tax credit claimant’s income can increase in-year compared to their previous year’s income, before their award is adjusted will be reduced from £5,000 to £2,500. This will cause overpayments if claimants do not remember to report income increases to HM Revenue & Customs.
Drop in Universal Credit Work Allowances
The work allowance is the amount of money you are allowed to earn before your universal credit award starts reducing. There are two rates for single parents with children:
- For those who do not have housing costs, the work allowance drops from £734 to £397 per month.
- For those who have housing costs, the work allowance drops from £263 to £192 per month.
- For single people, the work allowance is removed altogether.
Housing Benefit Family Premium – part of the applicable amount
The applicable amount is the amount that the Government says that you and your family need to live on each week. It is made of personal allowances and premiums. When your applicable amount is calculated, it is compared with your income to work out how much housing benefit you are entitled to. The housing benefit premium, worth £17.45 per week is being withdrawn for new claims. This means new claimants will receive less housing benefit.
Support for Mortgage Interest (SMI)
The waiting period will return to the pre-recession length of 39 weeks (from 13 weeks).
A reduction to the benefit cap from £26,000 per year to £20,000 per year for couples and single parents residing outside of London is part of the Welfare Reform & Work Bill currently going through
Parliament. Once the bill is passed, the date for its introduction will be introduced. The benefit cap applies to the following benefits: bereavement allowance, carer’s allowance, child benefit, child tax credit, employment & support allowance (those in receipt of the support component are exempt), guardian’s allowance, housing benefit, incapacity benefit, income support, jobseeker’s allowance, maternity allowance, severe disablement allowance, universal credit, widowed parent’s allowance.