Now workers with £ 50,000 can get universal credit: thousands of higher rate taxpayers will be eligible for major expansion in welfare state reach, economists say

  • Social protection overhaul means more middle-class single parents can claim the benefit
  • Chancellor Rishi Sunak slashed universal credit cut rate in budget last month
  • This decision allows claimants to keep more of their benefits as their income increases.
  • IFS said a total of seven million households will be entitled to benefits after the changes










Thousands of higher rate taxpayers will qualify for universal credit for the first time as part of a welfare state expansion, economists said last night.

Rishi Sunak’s welfare shake-up in the budget means more middle-class single parents can qualify for the allowance.

Many workers with more than £ 50,000 a year are now eligible for universal credit, and an additional 600,000 families are eligible.

Thousands of higher rate taxpayers will qualify for universal credit for the first time

The Chancellor slashed the rate of universal credit tapering off in the budget last month, allowing claimants to keep more of their benefits as their incomes rise.

The Institute for Fiscal Studies said a total of seven million households will qualify for universal credit after Mr. Sunak’s changes.

Although it is often seen as a benefit for low-paid and unemployed people, universal credit can, in fact, be claimed by some people higher up the income scale.

A quarter of all working-age families are now eligible. A higher tax rate is paid at 40 percent by those earning between around £ 50,000 and £ 150,000.

A single parent with two children and a monthly rent of £ 750 may earn just under £ 52,000 before losing the chance to claim universal credit, up from £ 44,500 before the budget, the IFS said.

A couple with one earner under the same circumstances can earn almost £ 59,000 in income before being cut, up from £ 49,300 previously.

The median annual salary of a full-time employee in the UK is £ 31,285.

While the Chancellor halted the temporary £ 20 increase in weekly universal credit payments, the rate of reduction was slashed from 63% to 55% when budgeted.

Rishi Sunak (pictured atop Cop26 on November 3) slashed the rate of universal credit tapering off in the budget last month, allowing claimants to keep more of their benefits as their incomes rise

Rishi Sunak (pictured atop Cop26 on November 3) slashed the rate of universal credit tapering off in the budget last month, allowing claimants to keep more of their benefits as their incomes rise

This means that for each additional pound earned, the benefit payment will now be reduced by 55 pence, or an additional 8 pence per pound in claimants’ pockets.

Tom Waters, an economist at IFS, said the reach of universal credit is “perhaps much broader than is commonly thought” after moving the benefit system up the income scale.

He said: “Budget reforms extend further up the income distribution, slowing the rate at which benefits are withdrawn as incomes rise.

“It will now be the case that three out of seven families with children will be entitled to at least one universal credit at some point, and much more in their lifetime.”

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