Key Changes for Single Parents in the Autumn Budget 2021

Universal Credit taper rate will decrease

The main change that will affect single parents is the reduction of the Universal Credit taper rate. This change is going to start from 1st December 2021.

The taper rate reduces your Universal Credit payments as you earn money. Currently, the taper rate is 63%, which means that for every pound you earn, you lose 63p in benefits. The new taper rate will be reduced to 55%, meaning that for every pound you earn, you will lose 55p in benefits.

Universal Credit work allowance will increase

For those with responsibilities for a child and/or a limited capability to work, there is an amount you can earn before the taper rate kicks in called your work allowance.

Currently, the work allowance is £293 per month if your Universal Credit includes housing support or £515 per month if it doesn’t. From December 2021, the work allowance will increase to £335 per month (inc. housing support) and £557 per month (without housing support).

National Minimum and Living Wages will increase

The National Minimum Wage (NMW) for all ages will rise from April 2022. The National Living Wage (NLW) for workers aged 23 and over will increase from £8.91 to £9.50 per hour.

Minimum wages for other age ranges will increase as follows:

• 21 to 22 year olds: from £8.36 to £9.18 per hour
• 18 to 20 year olds: from £6.56 to £6.83 per hour
• 16 to 17 year olds: from £4.62 to £4.81 per hour
• Apprentices: from £4.30 to £4.81 per hour.

The Budget also removed the freeze on pay rises for public sector workers. So, if you work in the public sector it is now possible to get a pay rise again.

Cost of living will increase

The cost of living is the amount of money someone needs to pay for basics such as food, rent, bills, and taxes. With inflation of over 4% predicted for next year, prices on basic goods are likely to get noticeably higher. This means that even if you get an increase in your benefits payment, it probably won’t cover all of these extra costs.

However, one benefit of the Budget is that fuel duty remains frozen, which should help with petrol prices.

What does this mean for me?

Good news

• If you’re working and claiming Universal Credit, your UC payments will go up
• If you’re on a minimum wage, your income will go up

Bad news

• The increased cost of living means you will be spending more money on basics each week
• If you’re not working, the changes to Universal Credit won’t help you
• If you are claiming an older (‘legacy’) benefit, such as working tax credit, the changes to Universal Credit won’t help you
• While not part of this Budget, everyone claiming Universal Credit lost £20 a week from the recent removal of the UC uplift

Examples

If you are a single parent with one child, working part-time on minimum wage:

• Your Universal Credit payments increase by £8 a week
• Higher cost of living will mean you lose £16 a week
• Overall, you would be £8 a week worse off

If you are a single parent with one child, working full-time on minimum wage:

• Your Universal Credit payments increase by £19 a week
• Higher cost of living will mean you lose £18 a week
• Overall, you would be £1 a week better off

Source for examples: Joseph Rowntree Foundation

Finding advice

You can call our free helpline to get a full benefit calculation that can tell you what Universal Credit payments you can expect to receive, including if your circumstances change.

You can also use this online tax calculator to get an estimate of how your family income will change as a result of the budget.