Thousands of families are set to see their Universal Credit payments change this month as new rules kick in across the board.
Parents will see the time frame for childcare reimbursements double - while it's good news for anyone that's currently experiencing any deductions.
Universal Credit is the Government's six-in-one benefit that encompasses Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA) and Working Tax Credit in one.
The changes mean, from this month, the maximum amount that can be taken out of Universal Credit payments will fall from 40% to 30%.
This means if you're currently affected by the 40% rate, you will start to see more money coming in every month.
Deductions can be taken out of a person's Universal Credit entitlement for various reasons, including sanctions and for recovering debts such as arrears on rent and fuel bills.
Approximately 850,000 people face these reductions each month, with 238,000 losing up to 40%.
The Department for Work and Pensions (DWP) estimates the new rates could leave couples £600 better off a year.
Will Quince, minister for welfare delivery, said: "We know that many people move into Universal Credit with existing debt, or choose to take up an advance to support them before their first payment.
"While safeguards are already in place to ensure that deductions are affordable we’ve taken this extra step to reduce the standard maximum deduction rate from 40% to 30% of the claimant’s standard allowance to ease the burden.
"Unlike the old system, Universal Credit is a flexible benefit that can be adapted as people’s needs change, ensuring they have more control over their working lives and their finances."
Claimants do not have to do anything as the reduced deduction rate will be automatically applied to their claim this month.
However, those who only repay their advance payment will not see the amount they receive change, as this repayment threshold will remain at around 15%.
The downside is that, while less will be taken, it could be taken for longer.
From October 2021 advance payment timescales will be increased from 12 months to 16 months.
What else is changing?
The second major change that's kicking in this month relates to childcare support.
From Saturday, October 16, claimants will have extra time to apply for refunds on money they've spent on childcare.
The new regulations will mean working parents and guardians will have an additional month to claim back up to 85% of eligible childcare costs with Universal Credit.
The time limit was previously one month - which critics said was leaving households at risk of falling into debt.
Minister for employment Mims Davies said: "Sometimes there just aren’t enough hours in the day to get everything done, and that’s before something unexpected happens like a trip to the hospital or having to stay late at work.
"We are determined to support families to balance work-life and parenthood.
"Allowing an extra month-long assessment period for people to report their childcare costs means people shouldn’t have to worry about missing out on crucial payments they are entitled to."
Find out more in our Universal Credit explained, guide, here .
