Benefits Uprating 2021
Benefits and tax credits that are linked to inflation rise by 0.5% in April 2021, while the triple lock delivers a 2.5% increase to the Basic and New State Pension. Temporary uplifts to Universal Credit and Working Tax Credit, worth £20 per week, are set to lapse in April 2021 - the Government says it will "look at the economic and health context before making any decisions" about further support for low-income families during the coronavirus crisis.
This note sets out the main benefit and tax credit rates that have been announced for the 2021/22 financial year.
Inflation-linked benefits and tax credits will rise by 0.5%, in line with the Consumer Prices Index (CPI) rate of inflation in September 2020.
The Universal Credit standard allowances and the Working Tax Credit basic element have reverted to being set in line with the usual annual uprating review and do not retain the temporary £20 per week uplift that was added in 2020/21 as part of a package of welfare measures introduced during the coronavirus outbreak. In response to calls for this uplift to be continued into 2021/22, the Government has said that it will “look at the economic and health context before making any decisions” about how best to support low-income families.
The Basic and New State Pensions continue to be uprated in line with the triple lock – that is, by the highest of the increase in earnings, price inflation (as measured by the CPI) or 2.5%. For the purposes of the 2021/22 uprating, the 2.5% minimum was the highest of these three benchmarks, meaning that:
- The full rate of the New State Pension (for those reaching State Pension age on or after 6 April 2016) will be £179.60 per week in 2021/22 (up from £175.20 in 2020/21)
- The full rate of the Basic State Pension (the core amount in the old State Pension system) will be £137.60 per week in 2021/22 (up from £134.25 in 2020/21).
The Pension Credit standard minimum guarantee (delivered by the Guarantee Credit) will rise by 1.9% to enable the cash increase in the full Basic State Pension to be passed through to Pension Credit recipients.