Additional Rate Threshold change
From April 2023 (tax year 2023/24) higher earners will start paying the Additional Rate of tax (45%) on earnings above £125,140. Previously this threshold was £150,000.
This will apply in England, Wales and Northern Ireland.
Social Security ('welfare benefits') including pensions
10.1% social security and pension rate increase
The majority of social security payments and state pension rates are to rise by 10.1% from April 2023.
NB: Some disability benefits are devolved in Scotland, so it is for the Scottish Government to decide uprating. Department for Work and Pensions (DWP) benefits are fully devolved in Northern Ireland, so it is for the Northern Ireland Executive to decide uprating in Northern Ireland.
Raising the Benefit Cap by 10.1%
From April 2023, the rate at which household benefits are capped will increase from £20,000 to £22,020 for families nationally and from £23,000 to £25,323 in Greater London. While for single adults it will be raised from £13,400 to £14,753 nationally and from £15,410 to £16,967 in Greater London.
Cap on increases to social rent
Under current rules, social rents (local authority and housing association) could have risen by up to 11.1%, but now they will only be able to rise by a maximum of 7% in 2023-24.
Cost of Living Payments
In 2023/24, further Cost of Living Payments will be made as follows:
- £900 to those in receipt of means-tested social security (Universal Credit, Income Support , income-related Employment and Support Allowance, income-based Jobseekers Allowance, Working Tax Credits, Child Tax Credits and Housing Benefit).*
- £300 to pensioner households (exactly who to be confirmed).
- £150 to those in receipt of disability related social security such as Disability Living Allowance, Personal Independence Payment and Attendance Allowance.
* In order to qualify, claimants will need to be in receipt of these benefits on a certain date which is to be confirmed.
Fraud and Error
An additional £280 million will be allocated to the DWP between now and 2024-25 to target fraud, error and debt across the UK social security system.
Universal Credit (UC) changes
Increased in-work conditionality for UC claimants
600,000 claimants on UC whose household income is typically between the equivalent of 15 and 35 hours a week at the National Living Wage (see section below) will be required to meet with a dedicated work coach in a Jobcentre Plus to increase their hours or earnings.
Delay of move to UC for ESA claimants
In 2023 the DWP plan to increase the migration of 'legacy benefit' claimants (those in receipt of Income Support, income-related Employment and Support Allowance, income-based Jobseekers Allowance, Working Tax Credit, Child Tax Credit and Housing Benefit) over to UC. This will continue apart from those in receipt of income-related Employment and Support Allowance (paid to those with ill health). The migration for these more vulnerable claimants will start in 2028.
Changes to Support for Mortgage Interest loans
Currently, there is very restricted support for mortgage interest payments available to those in receipt of certain social security payments. From Spring 2023, the government will allow those on UC to apply for a loan to help with interest repayments after three months of their UC claim instead of nine, and will abolish the zero earnings rule to allow claimants to continue receiving support while in work and on UC.
Increase to the Minimum Income Floor (MIF)
As a result of the increase to National Living Wage and National Minimum Wage from 01/04/23 (see below), the Minimum Income Floor within Universal Credit will increase.
The MIF is an assumed amount of income (usually the national living wage if aged over 23 yrs, or national minimum wage if aged up to 23 yrs, x 35 hours per week) applied to UC claims where the claimant is Gainfully Self-Employed (meaning broadly that self-employment is your main work and it is organised, developed, and regular and carried on in expectation of profit).
The MIF is applied every month regardless of how much you earn and if you earn more than it, your higher earnings amount applies.
If you are affected by the MIF, please contact Equity's Social Security and Tax team for further advice (see below).
Other notable changes
National Living Wage (NLW) and National Minimum Wage (NMW) increases
From 01/04/23, the National Living Wage will be increased from £9.50 an hour for those aged 23 and over to £10.42 per hour. For those under 23 yrs, the National Minimum Wage applies and will be increased as follows:
- For 21-22 year olds by 10.9% to £10.18 an hour;
- For 18-20 year olds by 9.7% to £7.49 an hour;
- For 16-17 year olds by 9.7% to £5.28 an hour;
- For apprentices: by 9.7% to £5.28 an hour
Energy Price Guarantee (EPG)
In 2023/24, the EPG — a limit to the amount you can be charged per unit of gas or electricity will increase. This will mean that the average household bill will be capped at £3000 per year, an increase from £2500 in 2022/23. This means we will be paying more for our gas and electricity in 2023/24. It will apply in England, Scotland and Wales, with equivalent support provided in Northern Ireland.
NB: You do not need to apply for EPG and you do not need to contact your energy supplier as it is applied automatically. If you are struggling to pay your fuel bills, please see Equity's Financial Support Guide, which can be found in Social security, tax and financial support.
Extension of the Household Support Fund
£1 billion will be provided to enable the extension of the Household Support Fund in England over 2023-24. The Fund is administered by local authorities who will deliver support to households to help with the cost of essentials. It will be for the devolved administrations to decide how to allocate the additional funding.
If you are struggling financially, please see the information available in Social security, tax and financial support. You can also contact our Social Security and Tax Advice Helpline for advice on tax, national insurance, and social security: open Mondays and Thursdays, 10am-1pm and 2pm-5pm, 020 7670 0223 or email email@example.com.