Covid-19: Benefits and income
Changes to universal credit, local housing allowance and housing benefit introduced to deal with the coronavirus pandemic.
The Universal Credit standard allowance was increased by £20 a week from 6 April 2020. This uplift was intended to be for 12 months but was extended for a further 6 months. It applies in any assessment period that ends before 6 October 2021.
DWP's ADM Memo 11/20 provides information on how payments under the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS) are to be treated for the supposes of calculating the claimant's entitlement to Universal Credit. While payments under both CJRS and SEISS are to be treated as earnings, certain grants and loans are to be treated as payments of capital and disregarded as business assets.
The minimum income floor
The minimum income floor is an assumed level of earnings applied to claimants whose business has been running for more than 12 months. Where earnings are below that amount, the DWP uses the minimum income floor to calculate the claimants universal credit award.
Between 30 March 2020 and 31 July 2021 regulations allowed the DWP discretion to suspend the minimum income floor.  The DWP stated that they were not applying the minimum income floor during the coronavirus outbreak.
In the Budget published on 3 March 2021 the government stated that minimum income floor will be gradually reintroduced from August.
Regulations allow the Secretary of State to still suspend the minimum income floor in limited circumstances up to 31 July 2022. In a written statement to Parliament, the Minister for Work and Pensions confirmed that where businesses are heavily impacted by restrictions, work coaches will have the discretion not to apply it for up to two months at a time on a case-by-case basis, for a maximum of three suspensions, adding up to six months in total.
Suspending third party deductions from UC
The DWP temporarily suspended some third party deductions (TPD), including repayments of rent arrears, from the end of April 2020 until 10 May 2020. This could put tenants whose UC is subject to an automatic deduction for rent arrears at risk of eviction. If a suspended possession order has been made, a missed payment could amount to a breach of the terms of the order.
Tenants in this situation should:
contact the landlord and arrange to repay any money that would normally be subject to a TPD for rent arrears
evidence the payment and if the payment is not successful, their attempts to make it
update their UC journal to note the fact that a TPD for rent arrears was suspended without a warning
Local housing allowance
Local housing allowance (LHA) rates were increased from 1 April 2020 to cover the lowest 30 percent of market rents in each area. LHA rates have been frozen at the same level in cash terms for 2021/22.
Accommodation under 'Everyone In' initiative and exemption from the shared accommodation rate
Unless exempt, single claimants under the age of 35 have their universal credit or housing benefit award restricted to the shared accommodation rate. One of the exemptions applies to claimants who have been accommodated in a homeless hostel or hostels for at least three months and have accepted support services.
LA Welfare Direct 8/2020 confirms that:
it is not necessary for the three months stay to be continuous or to be spent in the same hostel
this exemption applies where a homeless person has been accommodated under the ‘Everyone In’ initiative
Re-purposed B&Bs and hotels satisfy the definition of a 'hostel' where:
places in hotels and bed and breakfasts were allocated to people on the basis of homelessness prevention
clients are receiving equivalent care and support (or more) as they would in a usual hostel setting
local authorities or commissioned providers have taken over the hotels (or sections of them) rather than booking individual rooms, and are responsible for providing the support to the client
facilities are not self-contained (in other words, there are no kitchens) and clients are provided with meals
the local authority funds the hotel as a block booking, creating a license with the claimant, so there is no commercial relationship between hotel and claimant
the hotels and provision of care and support to the clients are managed on a day-to-day basis by voluntary/third-sector organisations
This means that if a claimant has been accommodated under the 'Everyone In' initiative, and satisfies the other criteria for this exemption, they may be eligible for one bedroom self-contained rate of universal credit or housing benefit.
Before 31 May 2021 this exemption only applied to claimants who were over 25.
LA Welfare Direct 4/2020 contains information about the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS), including how the schemes work and who is eligible to apply.
It confirms that for the purpose of calculating the claimant's entitlement to housing benefit:
income obtained from employer under the CJRS is to be treated as earned income and this continues to be based on the number of hours the employee normally works
income obtained under the SEISS is to be treated as taxable income received from self-employment and is part of the self-employed income assessment for the tax year in which it is received
Housing benefit for prisoners on temporary release
Prisoners on temporary release due to the coronavirus pandemic are eligible for housing benefit (HB), provided they meet the standard HB eligibility criteria.
From 12 May 2021 the regulations state that this only applies where the Secretary of State is satisfied that temporary release is expedient as a result of coronavirus. It will not apply to prisoners on temporary release for other reasons. This provision applies until 31 August 2021.
Further advice and resources
Where an employee cannot work because they have COVID-19 and/or are following the government’s advice to self-isolate, they may be entitled to sick pay through a company scheme, or may be able to apply for Statutory Sick Pay (SSP).
Citizens Advice have published a guide to benefits entitlement for those affected by coronavirus that includes more information about SSP and other hardship options for those unable to work or continue self-employment as a result of COVID-19.
The Department for Work and Pensions has published a collection of guides for members of the public whose income has been affected by the coronavirus pandemic, including information on what benefits are available and how to claim them.
The House of Commons Library has produced a briefing on various forms of financial help available to households whose finances have been affected by the pandemic, which includes information on welfare benefits, help with the cost of living, the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme.
Debt charity Step Change guidance on debt and coronavirus outlines what assistance may be available for people unable to meet their financial obligations, including paying their rent or mortgage, because of the coronavirus.
Information about financial assistance and grants that may be available to those whose income has been affected by the COVID-19 pandemic is also available from Turn2Us.
For details about hardship options for homeowners, see Mortgage arrears possession process.
For information about emergency measures for tenants, see Protection for tenants.
Last updated: 2 August 2021
reg 3 Universal Credit (Extension of Coronavirus Measures) Regulations SI 313/2021.
reg 3 Social Security (Coronavirus) (Further Measures) Regulations 2020/371, as amended by reg 2 the Social Security (Coronavirus) (Further Measures) Amendment Regulations 2020 SI 2020/397.
reg 2 Social Security (Coronavirus) (Further Measures) Regulations 2020/371 as amended by Universal Credit (Extension of Coronavirus Measures) Regulations SI 313/2021.
The Universal Credit (Coronavirus) (Restoration of the Minimum Income Floor) Regulations 2021 SI. 807/2021.
reg 4 Social Security (Coronavirus) (Further Measures) Regulations 2020/371; see also The Social Security (Coronavirus) (Further Measures) Amendment Regulations 2020 SI 2020/397.
The Rent Officers (Housing Benefit and Universal Credit Functions) (Modification) Order 2020 (SI.No.1519/2020.
paras 20-21 LA Welfare Direct 8/2020.
reg 2(1A) Housing Benefit Regulations 2006 SI 2006/213, as amended by the Housing Benefit and Universal Credit (Care Leavers and Homeless) (Amendment) Regulations 2021 SI No.546/2021.
para 14 of reg 7 The Housing Benefit Regulations 2006 SI 2006/213 and para 14 of reg 7 The Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006 SI 2006/214, as amended by Social Security (Coronavirus)(Prisoners) Regulations 2020 SI 2020/409 and the The Social Security (Coronavirus) (Miscellaneous Amendments) Regulations 2021 SI 2021/476
reg 4 The Social Security (Coronavirus) (Miscellaneous Amendments) Regulations 2021 SI 2021/476