Monday is the first working day of the new tax year, bringing substantial increases in vital benefits payments – in particular the state pension and universal credit, plus a host of other benefits. So what is changing and how might it affect you?
How much is the state pension rising by and why?
The state pension is rising by 8.5% on Monday – a significantly bigger percentage increase that paid to benefits claimants – because of the “triple lock”, which was first introduced by the coalition government and came into force in 2011-12.
It promises to increase the state pension every April in line with either the previous September’s consumer prices index measure of inflation (CPI), the amount that wages increased by, or 2.5% – whichever is the higher figure. For 2024-25, the rise will be in line with the amount wages rose by, meaning pensioners get an extra 8.5%.
State pensions are paid every four weeks to people who have reached the qualifying age and have paid enough national insurance contributions.
The new full, flat-rate state pension (for those who reached state pension age after April 2016) rises from £203.85 to £221.20 a week – or £11,500 a year.
The old basic state pension paid to those who reached state pension age before April 2016 rises from £156.20 a week to £169.50 a week – equivalent to a more than £600 annual increase to £8,814.
I’m on the lower, older pension. What help can I get?
Poorer pensioners on the basic rate may qualify for pension credit, which has also increased. The means-tested benefit is there to top up pensioners’ weekly income to £218.15 if they are single – up from £201.05 a week. Couples receive £332.95 a week, up from £306.85.
Anyone who qualifies for pension credit may also be entitled to other financial support, including cost of living payments, housing benefit, a reduction in council tax, or help with heating costs through the warm home discount scheme. People born before 25 September 1957 are also entitled to the annual winter fuel payment.
What about other benefits?
Because those on other benefits don’t enjoy the benefits of the triple lock, their increases are limited to 6.7% this year – as calculated by the increase to CPI last September.
Universal credit, claimed by about 6 million people in the UK, is the big beast of the benefits world and is given to workers on low incomes as well as those who are out of work.
For single people, the basic UC payments rise to £311.68 a month (up from £292.11) for the under-25s. For those 25 or over, it is now worth £393.45 a month (up from £368.74).
Couples who are both under 25 now receive £489.23 a month – up from £458.51, while older joint claimants where one or both are 25 or over get £617.60 a month (up from £578.82)
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The various other elements of UC, for example the top-up paid to those with children – plus a host of other benefits – all rise by 6.7%, too. These include personal independence payments, disability living allowance, attendance allowance and incapacity benefit.
Child benefit
Parents now receive £102.40 every four weeks (£25.60 a week) or £1,331 a year for the first or only child, and £67.80 every four weeks (£16.95 a week) for each additional child – £881 a year. The classic two-child family now receives £2,214 a year in child benefit – an increase of £137.80 a year compared with last year.
From 6 April 2024, families where the highest earner has a salary of up to £60,000 a year will not be subject to the high income child benefit charge. Previously, a person who had an annual income of £50,000 or more would be liable to pay the charge if they or their partner were receiving child benefit. The change means several hundred thousand families will be better off, some to the tune of up to £3,000 a year.
What is the state pension age and when can I retire?
More than 12 million people currently receive the state pension. Men and women born between 6 October 1954 and 5 April 1960 start receiving their pension at the age of 66. But for people born after this date, the state pension age has been increasing to 67 for those born on or after 5 April 1960. The plan is to introduce a gradual rise to 68 between 2044 and 2046 for those born on or after 5 April 1977.
Will the triple lock continue?
In March the chancellor, Jeremy Hunt, said the Conservatives would continue the triple-lock system, if they won the next general election. Labour has also said it is “committed to retaining” the triple lock. The triple lock was temporarily suspended for the 2022-23 tax year after the Covid pandemic distorted average wage figures, but later restored.
