Now workers on £50k can get Universal Credit handout: Thousands of higher-rate tax payers will be entitled to benefit in welfare state expansion, economists say

• Welfare shake-up means more middle-class single parents can claim the benefit 
• Chancellor Rishi Sunak cut Universal Credit taper rate at the Budget last month
• The move allows claimants to keep more of their benefits as their earnings rise 
• IFS said a total seven million households will be entitled to benefit after changes 

Thousands of higher-rate tax payers will be entitled to Universal Credit for the first time in an expansion of the welfare state, economists said last night.

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.

The Chancellor cut the Universal Credit taper rate at the Budget last month, allowing claimants to keep more of their benefits as their earnings rise. 

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.

Although it is often thought of as a benefit for the low paid and those not in work, Universal Credit can, in fact, be claimed by some people higher up the income scale.

A quarter of all working-age families are now entitled to the benefit. 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 Sunak (pictured at Cop26 summit on November 3) cut the Universal Credit taper rate at the Budget last month, allowing claimants to keep more of their benefits as their earnings rise

It means that for every extra pound earned the benefit payment will now be reduced by 55p, an extra 8p per pound in the pockets of claimants. 

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.’

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