Millions on Universal Credit to hit by £1,290 a year cut and tax rise double whammy

LOW-INCOME households are set to suffer the most from impending tax hikes to fund social care, experts warn.

Universal Credit claimants are already bracing themselves for the loss of a £20 weekly uplift and their income will also be hit by tax changes next year, leaving them with £1,290 less on average.

The £20 Universal Credit uplift was launched by the government at the start of the pandemic in 2020 to help households on low incomes.

It is set to be scrapped next month at the same time as the end of the government's furlough job support scheme.

This has prompted calls for the uplift to be maintained amid fears of a rise in unemployment once government support is withdrawn, which charities warn could push people into debt.

The cut comes as the government unveiled tax hikes this week to fund health and social care services.

This includes a 1.25% National Insurance increase as well as an extra 1.25% dividend tax charge from the start of the next tax year in April 2022.

Experts have warned that the removal of the weekly £20 Universal Credit payment coupled with the National Insurance hike will hit low-income households who are still in work the most.

Analysis by the New Economics Foundation (NEF) found 2.5million people who receive the benefit will be hit by the changes, losing £1,290 on average.

Sarah Arnold, senior economist for the NEF, told The Sun: "A lot of people who earn a lot of money have enough spare that can go into savings so they can deal with these hikes.

“However, every pound counts for someone who doesn’t have very much.

“There are real concerns for people on low incomes coming up between the cut to Universal Credit to rising fuel, energy bills and then National Insurance on top.

"The National Insurance hike also hits employers, which may mean higher costs and lower wages."

The government has ruled out reversing its Universal Credit cut.

Your household costs could also increase due to a £20 a week cut to Universal Credit this month and a rise in energy bills going this winter.

We have rounded up your rights if you are made redundant once furlough ends.

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