This is our summary of key budget changes
View the full budget documents
Benefits
Employment and Support Allowance – From April 2017 new ESA claimants who are placed in the Work-Related Activity Group will receive the same rate of benefit as those claiming Jobseeker’s Allowance, alongside additional support to help them take steps back to work.
Working-age benefits rate freeze - Working-age benefits, including tax credits and Local Housing Allowance, will be frozen for 4 years from 2016-17 (this doesn’t include Disability Living Allowance, Personal Independence Payment, Employment and Support Allowance support group payments, Maternity Allowance, Maternity Pay, Paternity Pay and Sick Pay)
Benefit Cap reduction and regionalisation- New legislation will allow the the Secretary of State to review the household benefit cap each year. Once passed the intention is to impose a cap reduction to £20,000 (£13,400 single rate) and £23,000 in London (£15,410 single rate).
Support for Mortgage Interest (SMI) – From 1 April 2016, the SMI waiting period will return to the pre-recession length of 39 weeks, but the capital limit will be maintained at the higher level of £200,000.
- From April 2018, new SMI payments will be paid as a loan.
- Loans will be repaid upon sale of the house, or when claimants return to work.
- Payments will accrue interest at a rate tied to the OBR forecast of gilts.
Tax Credit and Universal Credit in work reforms
- Income threshold reduction - From April 2016, the level of earnings at which a household’s tax credits and Universal Credit award starts to be withdrawn for every extra pound earned will be reduced from £6,420 to £3,850. Universal Credit work allowances will be reduced to £4,764 for those without housing costs, £2,304 for those with housing costs, and removed altogether for non-disabled claimants without children.
- Tax credit taper – This is the rate at which a person’s or household’s tax credit award is reduced. The taper rate will be increased from 41% to 48% from April 2016.
- Support for children – In households with two or more children any subsequent children born after April 2017 will not be eligible for further support. Equivalent changes will be made to the Housing Benefit rules. This will also apply in Universal Credit to families who make a new claim from April 2017.
- Family element - Those starting a family after April 2017 will no longer be eligible for the Family Element in tax credits. The equivalent in Universal Credit, known as the first child premium, will also not be available for new claims after April 2017. In Housing Benefit, the family premium will be withdrawn for new claims from April 2016.
Young people - Those aged 18 to 21 who are on Universal Credit will have to apply for an apprenticeship or traineeship, gain work-based skills, or go on a work placement 6 months after the start of their claim. Apart from certain exceptions (those considered vulnerable) they will not be allowed to claim Housing Benefit.
TV licences - The BBC will have to pay for free TV licences for the over 75s starting in 2018
Parents requirement to seek work - From April 2017 parents with a youngest child aged 3 or older (including lone parents) who are able to work will be expected to look for work if they are claiming Universal Credit.
Education
Abolition of maintenance grants - From the 2016-17 academic year new maintenance loan support will replace student grants. Cash support for new students will increase by £766 to £8,200 a year. Loans will be paid back only when graduates earn above £21,000 a year.
Social Housing
Rent reductions - Rents for social housing will be reduced by 1% a year for 4 years, and tenants on higher incomes (over £40,000 in London and over £30,000 outside London) will be required to pay market rate, or near market rate, rents - Pay to Stay.
The government will review the use of lifetime tenancies in social housing to limit their use with the aim of ensuring households are offered tenancies that match their needs, and ensure the best use is made of the social housing stock.
Tax
Personal allowances - The tax-free Personal Allowance will be increased from £10,600 in 2015-16 to £11,000 in April 2016. The government has an ambition to increase the Personal Allowance to £12,500 by 2020, and a law will be introduced so that once it reaches this level, people working 30 hours a week on the National Minimum Wage won’t pay Income Tax at all.
Work
Free child care - From September 2017, working families with 3 and 4 year olds will receive 30 hours of free childcare – an increase from the 15 hours they’re currently offered.
National living wage - From April 2016, there will be a new National Living Wage of £7.20 an hour for the over 25s. This will rise to over £9 an hour by 2020.
Employment Allowance rises - Businesses will have their employer National Insurance bill cut by another £1,000 from April 2016, as the Employment Allowance rises from £2,000 to £3,000. The Employment Allowance gives businesses and charities a cut in the employer National Insurance they pay.
Apprenticeship levy - There will be an apprenticeship levy on all large employers with the aim of creating 3 million new apprenticeships by 2020. Firms that are committed to training will be able to get back more than they put in.