The following benefit changes are set to take place in 2016, some may be subject to change or approval.

Benefit and Tax Credit rates frozen

The main rates of working age benefits and tax credits will be frozen in cash terms for 4 years from April 2016. Pensioner benefits are excluded from the benefit freeze and will be protected by the ‘triple lock’.  

Disability benefits, the disability-related elements of tax credits and statutory payments including Personal Independence Payment, Attendance Allowance, Disability Living Allowance, Employment and Support Allowance (Support Group only), Maternity Allowance, Statutory Maternity/Paternity Pay and Statutory Sick Pay, will be uprated in line with the Consumer Prices Index (CPI). The CPI was announced to have fallen in the year to September 2015 so this means that the benefits mentioned above will not be increased from April 2016.

Benefit cap reduced

There is currently a benefit cap in place in England, Scotland and Wales restricting the amount in certain benefits that a working age household can receive. Any household receiving more than the cap has their Housing Benefit reduced to bring them back within the limit. This benefit cap is to be introduced in Northern Ireland from 31 May but will exempt those in receipt of Carer's Allowance - which isn't yet the case in Great Britain.

Regulations have been brought in to introduce 'Welfare Supplementary Payments' to be paid to any households with children in Northern Ireland who have their Housing Benefit reduced due to the cap. The payments will match the amount by which their Housing Benefit is reduced, effectively meaning they are no worse off. These payments will remain until 31 March 2020.

From 7 November 2016 the cap which is currently up to £26,000 per year is to be reduced to £23,000 for households living in London and to £20,000 for those outside London, when exactly you will be affected will depend on where you live, the roll-out is expected to take a number of weeks. When this reduced cap is brought in, the exemption for those in receipt of Carer's Allowance will also apply in England, Scotland and Wales like in Northern Ireland and Guardian's Allowance will also be added to the list of benefits that exempt you from the cap. For further details see our Benefit cap reduction Autumn 2016 help page.

Housing Benefit changes

Unlike other reforms the Chancellor announced directly affecting child related payments, withdrawal of the family premium in Housing Benefit (£17.45 when a claimant has one or more dependant children) will take effect from 1 May 2016, a year earlier than the reductions for children within Child Tax Credit and Universal Credit. Removal of the family premium will affect both new claims and new births from 1 May 2016. For further details see our Family premium abolished May 2016 help page.

Housing Benefit backdating will be reduced so that new claims from working age claimants will be backdated for a maximum of one month. Currently, if you are working age, your Housing Benefit claim can be backdated for up to six months if you can show good cause for making a late claim and you would have qualified for the benefit sooner.

It was previously intended that if you are a social sector tenant (council or housing association) and you signed your tenancy from 1 April 2016, you would be affected by the introduction of Local Housing Allowance (LHA) for social sector tenants from 1 April 2018 (this was later put back to 1 April 2019). The LHA rate sets the maximum rent that Housing Benefit can cover based on the location and size of property your household needs. The Government has since decided against this reform so it will not be introduced.

Tax credit allowance and taper cut

On 25 November 2015 during the Chancellor's combined Autumn Statement and Spending Review, he announced that the widely unpopular planned tax credit changes (reduced income threshold and increased taper rate), which would have meant that any working household receiving tax credits with an annual income of more than £3,850 a year would be worse off, would in fact not be going ahead.

Tax credit income disregard cut

At the moment, if your household income increases by up to £5,000 during the tax year this increase is ignored when calculating your entitlement for that year. From April 2016 this will be reduced so that any increase in income of more than £2,500 will be taken into account. According to the Treasury, it is estimated that 800,000 people will see their entitlement to tax credits reduced by an average of £200-£300 per year due to this cut which brings the 'income rise disregard' back to the same level it was when tax credits were first introduced.

New State Pension

For those reaching pension age from 6 April 2016 a new State Pension is being introduced to replace the basic State Pension and State Second Pension. This affects all women born on or after 6 April 1953 and all men born on or after 6 April 1951. The new pension is designed to be much simpler than the current system and will consist of a single amount to be awarded in full if you have 35 qualifying years of National Insurance contributions. If you don't have the contributions required for the full pension, as long as you have a minimum number of qualifying years (between 7 and 10) you will receive a pro rata amount. If you don't have the minimum number of qualifying years you will not qualify for the single tier pension. Any contributions made under the current pension system can be used toward the new State Pension.

If you qualify for the full amount you will receive £155.65 a week. For those who do gain in state pension income, for some this will be offset by reductions in means-tested benefit entitlements and if you fall under the new single tier pension system you will not be able to claim the Pension Credit savings credit. To find out more see Age UK's 'what the new pension reforms mean for you'

Universal Credit changes

The work allowance in Universal Credit, the amount you can earn without your benefit being affected, will be reduced from April 2016. For disabled people and people with children it will be reduced to £192 per month if you have housing costs and £397 per month if you don’t have housing costs. The work allowance will be abolished altogether from April 2016 for non-disabled, childless claimants meaning your benefit is reduced as soon as you start earning.

The Childcare Costs element of Universal Credit currently pays for 70% of your registered childcare costs up to a monthly limit of £532 for one child or £912 for two or more children. From 11 April 2016, this will increase so that you will be able to claim back up to 85% of your paid out childcare costs up to a monthly limit of £646 for one child or £1108 for two or more children.

If you are a social sector tenant (council or housing association), you will be affected by the introduction of Local Housing Allowance (LHA) for social sector tenants from 1 April 2018 (this has since been put back to 1 April 2019). The LHA rate sets the maximum rent that the Universal Credit housing costs element can cover based on the location and size of property your household needs. For further details see our Local Housing Allowance help page.

Disability Living Allowance changes

Claims for DIsability Living Allowance can still be made by people aged 16-64 in Northern Ireland, however, from 20 June 2016 all new claims will be for Personal Independence Payment rather than DLA. Existing claimants of DLA reporting a change of cicumstance will also be assessed for PIP rather than DLA.

From December 2016 DLA claimants in Northern Ireland with an indefinite award will start to be assessed for PIP.  

Other changes

National Minimum Wage increased

The National Minimum Wage will be 'rebranded' as the National Living Wage and will be increased to £7.20 per hour for those 25 or over from April 2016. It will reach £9.00 per hour by 2020. 

Personal tax allowance increased

The Personal Tax Allowance, the amount you can earn before paying income tax, will be increased from £10,600 to £11,000 from April 2016. It will be further increased to £12,500 by 2020 and thereafter it will automatically be set at the same level as 30 times the National Living Wage (National Minimum Wage).

Rent changes for social tenants

From April 2016 social housing rents will be reduced by 1%, or in some exceptions frozen, for four years.