Universal Credit changes and other personal finance law updates
05th October 2021
Now that we’ve reached October, some pretty big changes in the law are kicking in that could impact the cash in your wallet. Here are the main points.
October 2021 update:
What is the energy price cap?
With the cost of producing energy leaping up, it’s looking like about 15 million UK homes are set to become more expensive to heat from October. Ofgem, which sets the cap on prices that energy suppliers are allowed to charge, has raised the limit and several companies are already jacking up their prices to the maximum.
If you’re worried about the cost of heating your home over the winter, remember to check what kinds of deals you can find with other suppliers. On top of that, you could get £140 knocked off your energy bills if you qualify for the government’s Warm Home Discount Scheme.
Furlough and Universal Credit
The lifeline of the Coronavirus Job Retention Scheme, which saw millions of us through the worst of the pandemic crisis, finally shut down at the end of September. As of October, the government will no longer be kicking in a percentage of wages for people on furlough or working reduced hours because of COVID-19. The scheme’s been tailing off for a while now, but after September it’s gone completely.
Meanwhile, that £20 weekly uplift in Universal Credit payments is also gone as of the 1st of October. This move is set to see typical payments falling from just over £411 to just under £325.
Property law changes
There are a few shifts in the rules about buying and renting out property, and the 1st of October’s an important date for some of them:
- The Stamp Duty rate is heading back to its previous limit of £125,000. There was a total Stamp Duty holiday in effect up until July, with the scheme’s benefits tapering off since then.
- Eviction notice periods, which had been set at 6 months until June and then cut to 4, will now return to 2 months.
VAT price bumps for days out
The rate of VAT charged on “hospitality” businesses was cut from 20% right down to 5% to help boost companies suffering during the pandemic. As of October, those VAT rates are heading back up again, hitting 12.5% for the next 6 months before returning to 20% in the new tax year.
Essentially, the cost of eating out, drinking in pubs and much more could be rising very soon.
New tax year: what’s changing from April 2022?
State pension changes
You’ve probably heard about the “triple lock” on State Pensions that aims to see payments keep pace with the rising cost of living. The locks are based on increases in inflation, growth in average earnings and a flat 2.5%.
That commitment has now been knocked down to a “double lock”, with the earnings lock suspended for a year. It’s happening because the COVID-19 pandemic has slanted the earnings figures quite a lot, with an unexpected 8% rise in wages making that lock difficult to live up to.
National Insurance increase
A hike in National Insurance Contributions is coming in the new tax year, and it’s got a lot of people concerned. Both Class 1 and Class 4 contributions will be hit by the 1.25% increase, meaning both PAYE employees and self-employed people will pay more.
More Universal Credit changes
The new tax year will see a big drop in the Surplus Earnings threshold for Universal Credit claimants. Right now, you can earn up to £2,500 over the Universal Credit threshold before your earnings start carrying forward to affect your next month’s claim. After April, though, that threshold is coming down to £300, meaning your income will start carrying forward much sooner.
...and there’s more
Take a look at our New Laws You Need to Know About blog for even more updates. From light bulb bans to new kinds of petrol, we talk you through the rules and regulations covering rest of 2021. When you’re done there, check back soon for more from the UK’s top tax experts at RIFT.
If you've not checked if you're due a tax refund for travel and other work expenses then try our free tax refund calculator. It only takes a few minutes and you could find that you're due several thousand. 2/3 who should be claiming don't realise that they can so over £300m per year is missing from workers' pockets. Make sure you get yours.