There are some key changes to Universal Credit and National Insurance this month.
Millions of Britons will see their benefits and contributions change over the coming days and weeks.
The UK remains in the grip of a cost of living crisis, with many people changing their spending habits to cope.
Inflation – the rate at which prices rise – was recorded at 9.1% for May, its highest level since March 1982.
Britons are also grappling with rising fuel costs – the average price of a liter of petrol in UK suburbs hit a new high of 191.5p on Sunday, while the average price of diesel was 199.0p a litre.
Watch: Cost of living crisis ‘has little to do with Brexit’, says Rees-Mogg
A study published by the Institute for Fiscal Studies (IFS) on Monday revealed that 49% of children in single-parent families in the UK were living in relative poverty at the start of the coronavirus pandemic.
This percentage equates to 1.5 million children. It is almost double the percentage of children living in two-parent families (25%).
Many people will be keeping a close eye on their finances this month as changes to Universal Credit and National Insurance are introduced.
What is happening to National Insurance?
National Insurance is the contributions you pay to qualify for certain benefits and the State Pension.
From tomorrow, Wednesday 6 July, the income threshold for paying National Insurance Contributions (NIC) will increase.
Until July 5, any employee earning more than £9,880 a year or £190 a week had to pay NIC. However, the threshold will be raised from Wednesday to £12,570 a year or £242 a week.
There is a government calculator that people can use to work out how much their NICs will fall.
A person on an annual salary of £25,000, for example, will pay £244 less per year because of the change.
Chancellor Rishi Sunak said seven out of 10 people will pay less National Insurance from this week.
How might the change to National Insurance affect Universal Credit?
Universal Credit is a monthly payment to help with living costs and is available to people on low incomes or those who are out of work or unable to work.
Universal Credit replaces other benefits and tax credits, such as Child Tax Credit, Housing Benefit, Income Support and Income-Based Jobseeker’s Allowance.
The change to National Insurance could mean someone on Universal Credit pays less tax and gets more take-home pay.
If you work, the amount of Universal Credit you get goes down as you earn more.
Once you earn more than your Work Allowance, your Universal Credit payments are reduced at a steady rate known as Universal Credit Income Reduction.
This reduction rate is currently 55% after Sunac cut it from 63% in its Autumn 2021 Budget, meaning that for every £1 you earn on top of your work allowance, your Universal Credit will be reduced by 55p. This amount is automatically deducted from your Universal Credit payment.
What else is happening with Universal Credit in July?
In May, Sunak unveiled a £15 billion aid package to help UK households struggling with rising energy bills.
This includes a payment of £650 for more than eight million households on the lowest income.
These households will receive the first installment of this payment between July 14 and the end of the month.
This will be a payment of £326. The second payment of £324 will go into their bank accounts in the autumn.
Payments will be made to households under the following benefits: universal credit, income-based jobseeker’s allowance, income-related employment and support allowance, income support, working tax credit, child tax credit and pension credit.
Watch: Rishi Sunak celebrates arrival of Universal Credit taper cut