Martin Lewis discusses Rishi Sunak's spring statement
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Rishi Sunak increased the threshold at which people have to pay national insurance by £3,000 to £12,570 this week. Although this should mean that most people are £330 better off, one MP says around half of this could be clawed back.
That’s because £170 will be clawed back by the Government as the higher threshold will affect the Universal Credit taper allowance.
The issue will affect around 40 percent of Universal Credit claimants who are in work but claim the state benefit to top up their income.
The ‘taper rate’ means 55p of Universal Credit is deducted for every pound earned above the work allowance.
As more money is earned, more of the benefit will be deducted resulting in many Britons not being that much better off at all.
Clive Efford, MP for Eltham told the Commons: “This is money being clawed back by the Government from some of the poorest workers in the country and that can’t be right.”
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He continued: “It cannot be right that these people are missing out in this way, I think it must be an oversight on the part of the Government.
“It would be an extremely callous move indeed if they actually knew that this was the consequence.”
“I hope it’s an anomaly that the Government will want to put right.
“Those people who are on Universal Credit who pay national insurance, when they see the raising of the threshold to £12,500, that the £330 that they gain as a consequence of that will be subject to the 55 per cent taper, which means they won’t get the full amount of the savings.”
More than two (2.3) million Universal Credit claimants are thought to be affected.
Mr Efford added: “So my calculation is, and I stand to be corrected if I’m wrong, that they stand to gain £330, of which they would lose £171, so the actual gain will be somewhere in the region of £159.”
“I hope by highlighting just how much that is that they will attempt to do something about it and to compensate these people for this loss.”
The Treasury admitted that people claiming Universal Credit may be affected and will report back to Parliament within 30 days.
Meanwhile, more than a million more Britons could be owed £596 a month thanks to a recent Universal Credit rule change.
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Rishi Sunak cut the Universal Credit taper rate in his Autumn budget resulting in more families becoming eligible for the top up.
He cut the taper rate from 63p to 55p meaning people could earn hundreds more and still qualify for financial support.
The change was supposed to make two million Britons better off, but many still don’t know about it.
To find out people should input their details into the benefits calculator on Gov.uk.
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