Changes to Universal Credit that could make some working claimants £1,000 better off per year are due to come in early to ensure more people can benefit before Christmas, the Government has said.

Last month during his Budget speech Chancellor Rishi Sunak set a deadline no later than December 1 for the taper rate to be cut by 8%.

However, the DWP has now announced that the reduction will come into force on Wednesday, November 24.

The UC taper rate is the amount of benefit taken away for every £1 earned above the claimant’s work allowance. This will be brought down from 63% to 55%.

These changes are in force now, and will mean working families will be keeping an extra £1,000 a year of what they earn.

Celtic Way: Chancellor Rishi Sunak announced the Universal Credit taper rate change in the Budget (Victoria Jones/PA)Chancellor Rishi Sunak announced the Universal Credit taper rate change in the Budget (Victoria Jones/PA)

The work allowance, the amount a claimant can earn before their benefit is reduced, will also increase by £500 per year.

The DWP said these changes to the taper rate and work allowance amounted to a tax cut worth £2.2 billion, possibly benefiting up to 500,000 more people before Christmas due to the decision to introduce it seven days earlier than the Chancellor’s deadline.

However, think tanks have warned that the taper rate cut will not make up for the £20 weekly coronavirus uplift that was taken away last month.

Work and Pensions Secretary Therese Coffey said: “From today, two million people will see their income boosted by £1,000 per year, on average, as we bring in an effective tax cut worth £2.2 billion for the lowest paid.

“We are making the change earlier than planned which means up to 500,000 more households can benefit before Christmas.”

Mr Sunak said: “We want this to be a country that rewards hard work by helping the lowest income families keep more of their hard-earned cash.

“That’s why at the Budget, I announced an effective tax cut for two million people worth over £2 billion.

“These changes come into force today and will mean, with Christmas approaching, hard-working families keeping an extra £1,000 a year of what they earn.”

Karl Handscomb, a senior economist at the Resolution Foundation think tank, praised the changes made by Government but warned that some families would still be “worse off overall” due to recent policy decisions.

He said: “This represents a major living standards boost to low-income families, by improving people’s incentives to enter work, and allowing them to keep more of their earnings.

“But while these changes mean more support for higher-earning families on Universal Credit this winter, the recent £20 a week cut in support means that 3.6 million families will still be worse off overall, particularly those who have lost their jobs, or who are unable to work.”

Senior research economist Tom Waters said: “Another 600,000 families will become entitled to at least some Universal Credit, bringing the total to seven million – a quarter of working age families.

“It means that UC will now reach a long way up the earnings distribution – some families would still be entitled even if they became higher rate taxpayers.”

According to the DWP, a single claimant with one child and working 35 hours a week on the national living wage and with housing costs of £142 a week, could be £120 per month better off after wage rises and the taper allowance changes being taken into account.

As of April 2022, the national living wage is due to rise from £8.91 to £9.50 for those aged 23 and over.