Yahoo Finance Nearly 2 million Brits will lose £1,000 a year on universal credit
Nearly 2 million Brits will lose £1,000 a year in the switch to universal credit, with disabled claimants and low-income families hit the hardest, according to new research.
A study by the Institute for Fiscal Studies (IFS) found up to 1.6 million Brits will have gained £1,000 a year by mid-2024 when the benefit is fully rolled out – but 1.9 million will lose at least this much.
Almost a third (29%) of those in working rented households will be entitled to at least a grand more, accounting for any large gains, according to the IFS briefing note published Wednesday.
VIDEO: Universal credit explained
But self-employed low earners, couples where one partner is above state pension age, those claiming disability benefits, and people with financial assets greater than £6,000 will be £1,000 a year worse off, with 77% of those who lose this much belonging to one of these groups.
However, the self-employed, owner-occupiers and people with significant financial assets are 1.5-2 times more likely than other low-income groups to find themselves only temporarily poor, the institute said. Because of these changing circumstances, large persistent gains or losses will be less common than large temporary ones.
While 17% of those entitled to means-tested benefits will see a £1,000 drop in their annual income in the short run, only 11% will see a change that big to their longer-term incomes.
VIDEO: What is universal credit?
The low-earning self-employed will lose £2,100 a year initially, but this will fall to £850 a year in the long run, as their incomes increase. The average loss for those with significant assets is £1,430 in the short run but £420 in the long run.
The exception to this trend is those who claim disability benefits – those who are disabled or live with a disabled person are especially likely to be persistently poor, the IFS said.
And its the poorest Brits who will lose the most proportionately, as those in the bottom 10% lose 1.9% of their income – equivalent to £150 per year per adult.
