Benefit rate changes for 2020
By Peter Smith, Financial Advocate and New Business Advocate for Dosh
April generally brings a review of benefit rates and this year is no exception. There is some welcome news for working age benefit recipients, and a one-off increase for Universal Credit recipients to reflect the current Coronavirus situation. Pension benefits continue to enjoy the ‘triple lock’, which means they increase by the most favourable amount calculated from three different elements. Let’s look at some of the changes, starting with working age benefits.
The then Chancellor George Osborne announced a freeze on the personal allowance element of benefits in 2016, but that has changed for 2020 and for the first time in five years the basic personal allowance element will increase by 1.7%. This change affects Jobseekers’ Allowance, Employment and Support Allowance (both personal allowances and the work-related activity component), Income Support, Child and Working Tax Credits, some elements of Housing Benefit and finally Universal Credit. You can see some examples of the increased figures on our benefits uprating poster.
For Universal Credit (UC) recipients only – so this does not apply if you are in receipt of any other benefit – there will be an additional amount of £20 per week, paid for the next twelve months until April 2021. As UC is actually paid monthly this means that the standard allowance for a person over 25 will increase from £317.82 per month to £409.89 per month. Other components of UC are also increased by 1.7%.
There is also welcome news for those who receive help with housing costs either via UC or through Housing Benefit. If you are subject to the limits provided by the Local Housing Allowance (LHA) – so if you rent from a private landlord, for instance – then the LHA will also increase by 1.7%.
This is also the first increase in this allowance for five years.
For pension age benefit recipients, then both State Pension and the minimum amount of Pension Credit increase by the triple lock figure, which for 2020/21 is based on the average earnings index, and brings an increase of 3.9%. Please see the uprating poster for some examples of what that means in pounds for Pension Credit. State Pension entitlements are all individually calculated, so people can have different amounts, but the full amount of the new State Pension goes up from £168.60 per week to £175.20.
Disability benefits like Personal Independence Payment and Disability Living Allowance have continued to be increased each year while the other benefits were frozen. This is also the case for 2020, and these benefits are also increased by 1.7%. Again, please see our uprating poster for some examples of the actual figures. This increase also applies to the disability premiums payable with some means tested benefits like ESA and Pension Credit, so they will rise too.
While most benefit increases lag behind the increases in earnings, it is good to see some relaxation of restrictions this year with the basic personal allowances and the LHA. Hopefully this will be of help to those who need it most.
If you are supported by Dosh, your Financial Advocate will include these increases on your next Money Plan.
If you manage your own benefit and want to check you are getting the benefits you are entitled to, you can use an online calculator: www.gov.uk/benefits-calculators or view all the relevant rates for each benefit at www.gov.uk/browse/benefits. For a more detailed review, Dosh can conduct a Money Check.
