Rishi Sunak bowed to pressure to maintain the £20 a week Universal Credit uplift on Wednesday, but said due to operational factors, households in receipt of working tax credits would receive an alternative payment from April.
Citing "operational" reasons, the Chancellor said working tax credit claimants will receive a one-off payment of £500 instead of the £80 a month boost.
The new payment will replace the temporary increase in working tax credits which will end as planned on April 5.
"To support low-income households, the Universal Credit uplift of £20 a week will continue for a further six months," Sunak told The Commons.
The extension of the uplift means that claimants will receive an extra £20 a week between April 1 and September 30 on top of the standard allowance, which will rise to £324.84 a month for a single person.
"We'll provide working tax credit claimants with equivalent support for the next six months," he added.
"And because of the way that system works operationally, we will need to do so with a one-off payment of £500."
The two measures are together expected to cost a total of £3billion, with the payments set to be issued April 23.
Who qualifies for the £500 payment?
Most people on benefits now receive Universal Credit instead of tax credits - however, the complete switchover is not scheduled until 2024, which means millions of people will still get the one-off sum.
This includes those in receipt of the severe disability premium.
You do not need to apply for the support. HMRC said it will contact you by text message or letter in April to confirm you are eligible.
It's available to those who, on 2 March 2021, received:
- Working tax credit payments
- both working tax credit and child tax credit payments
- Child tax credit payments and are eligible for working tax credit but do not get a payment because their income is too high
If you are eligible, you should receive your payment by April 23, 2021.
