According to economists, Universal Credit will now be available for thousands of tax-payers at higher rates.
Rishi Sunak’s welfare shake-up at the Budget means more middle-class single parents can claim the benefit.
Many workers on more than £50,000 a year can now claim Universal Credit, with an extra 600,000 families entitled to receive it.
Last month’s Budget saw the Chancellor reduce the Universal Credit taper rate, which allows claimants to retain more benefits as they earn more.
Rishi Sunak’s welfare shake-up at the Budget means more middle-class single parents can claim the benefit. Many workers on more than £50,000 a year can now claim Universal Credit, with an extra 600,000 families entitled to receive it (file photo)
The Institute for Fiscal Studies said a total of seven million households will be entitled to Universal Credit after Mr Sunak’s changes.
Universal Credit is not only a benefit that the poor receive, but it can also be claimed by those who earn more.
The benefit is now available to 25% of working age families. Higher rate tax is paid at 40 per cent by those who earn between around £50,000 and £150,000.
A single parent with two children and monthly rent of £750 can earn just under £52,000 before losing the ability to claim Universal Credit, up from £44,500 before the Budget, the IFS said.
A couple with just one earner in the same circumstances can make almost £59,000 in income before being cut off, a rise from £49,300 previously. The median annual earnings for a full-time employee in the UK are £31,285.
While the Chancellor ended the temporary £20 uplift to weekly Universal Credit payments, the taper rate was cut from 63 per cent to 55 per cent at the Budget.
Rishi (pictured at Cop26 summit, November 3) reduced the Universal Credit taper rate at Budget last Month. It allowed claimants more benefit as they earn higher.
The benefit payments will be cut by 55p every pound that is earned, which means claimants can now pocket an extra 8p per each pound.
Tom Waters, economist at the IFS, said: ‘The Budget reforms extend that reach further up the income distribution, by slowing the speed that the benefit is withdrawn as earnings increase.
‘It will now be the case that three in every seven families with children will be entitled to at least some Universal Credit at any one time, and many more over the course of a lifetime.’