Universal Credit change and £420 boost for 1.2 million homes
It places a limit on how much people in debt can have taken off their benefits to pay what they owe.
What is the Fair Repayment Rate?
The Fair Repayment Rate was introduced by the Chancellor at the Autumn Budget, as part of broader efforts to raise living standards, combat poverty, and tackle the cost-of-living crisis.
Chancellor of the Exchequer Rachel Reeves said: "As announced at the budget, from today, 1.2 million households will keep more of their Universal Credit and will be on average £420 better off a year. This is our plan for change delivering, easing the cost of living and putting more money into the pockets of working people.
"With as many as 2.8 million households seeing deductions made to their Universal Credit award to pay off debt each month, the new rate is designed to ensure money is repaid where it is owed, and people can still cover their day-to-day needs."
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How does it work in a Universal Credit assessment period?
The maximum amount that can be taken from someone's Universal Credit standard allowance payment to repay debt has been 25% – but from today this is reduced to 15%.
This will mean an average £420 extra a year for 1.2 million of the poorest households, including 700,000 households with children, while helping people to pay down their debts in a sustainable way.
The change will be applied to all assessment periods that start on or after 30 April.
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I'm not saying the UK can't work something out for itself, but the track record isn't great – in anything. wolfie The poorest pay a greater share of tax Taken from the Equality Trust using ONS figures: "The poorest 10 per cent of households paid on average 48 per centof their income in tax in 2022/23. The richest 10 per cent of households, however, paid on average just 39 per cent of their income in tax. Council tax is a key source of disproportionate taxation, with the poorest 10 per cent paying 7 per cent while the richest 10 per cent pay just 1.2 per cent. Similarly, VAT hits the poorest harder, with the poorest 10 per cent paying 12 per cent while the richest 10% pay just 3 per cent. The post-tax income for the richest 10 per cent is £112,874 – over 12 times higher than the poorest 10er cent's post-tax income of £9,651.00." We really can't afford to support the lifestyles of the mega-wealthy. TalkingSense Taxes are already too high Labour has already raised taxes above what was already the highest ever level in history. Such ever-higher taxes lead to ever-lower growth, and even declining GDP. Taxes need to be cut, and health and welfare overspending cut back. Mark Look to Scandinavia Our party system has failed. And capitalism itself has failed. But at least Scandinavian countries have the sense to employ much fairer and more humane versions of it. As the quality of life in those countries incontrovertibly proves, including their health systems, social services, benefits, and transport systems. Cyclone8 Minimum wage What politicians avoid discussing – including Farage and Starmer – is whether taxation is equitable in the UK, and whether the UK government spending so much on top-up benefits could be reduced by raising the minimum wage and making sure it's enforced. forum Cutting benefits unacceptable Cutting benefits is an unacceptable method of balancing the books. Taxing the rich is currently impossible unless done in a coordinated global way. The only things left – as we are already being ridiculously austere –are to have the middle classes carry the burden and continue to make savings via management of immigration. BigDogSmallBrain Tackle public sector inefficiency I think taxes have been raised enough, and it's high time public sector inefficiencies are addressed. Of course, with a governing party beholden to the unions, this is very unlikely. Ian Robinson Hyper-luxury VAT could help A 100 per cent VAT on private jets, luxury yachts, caviar, Ferraris, handbags that cost more than the average weekly shop, diamond tiaras, and hundreds of other hyper-luxuries would benefit the many and impact the few. If you can afford a third home, a fourth holiday, or a private chef, you can afford to pay a lot more in taxes. FishPapp People want services, but not taxes The problem, as I see it, is that people want a nice country. 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