What the autumn budget means for single parents

The autumn budget was announced on 30 October 2024 and outlines the Labour Government’s plans for spending. 

31/10/2024

Although the Scottish budget won’t be announced until December, it’s still useful to think about how the UK autumn budget will affect single parents in Scotland.

OPFS statement on the autumn budget

Read the full statement on the autumn budget by OPFS Chief Executive, Satwat Rehman.

What is it?

The Budget is drawn up every year by the Government. Chancellor of the Exchequer Rachel Reeves delivered the Budget to the House of Commons on October 30th 2024. It talks about the UK’s financial situation and proposes the Government’s changes to taxation.

Most of the changes in the Budget won’t actually come into effect until the new tax year in April 2025, but it’s good to be aware of what will be changing so that you can plan ahead.

The Scottish budget won’t be announced until December 2024, but the UK budget gives us an idea about what is to come later in the Scottish budget. Some of the changes will also directly affect Scotland where things aren’t devolved, for example with National Minimum Wage or Universal Credit.

We have compiled some info to let you know how the changes from the UK autumn budget might affect single parents in Scotland.

Minimum wage increase

In April 2025, the National Minimum Wage will increase as follows:

  • For those aged 21 or over, it will increase from £11.44 to £12.21 per hour.
  • For those aged 18 to 20 years, it will increase from £8.60 to £10 an hour.
  • For apprentices and those aged 16 or 17 years old, it will increase from £6.40 to £7.55 an hour.

 

However, this means that you could be liable to start paying tax.

Personal Allowance is the amount of money you can earn without paying tax. That amount is currently £12,570 in Scotland. Even though minimum wage will be increasing, the amount of money that you can earn without paying tax (Personal Allowance) has not increased to match it.

This means that if you work for 20 hours or more per week on minimum wage, you could be liable to start paying tax when minimum wage increases in April 2025.

You can find out more about Personal Allowance at the Scottish Government website.

 

Here are two different scenarios to help you imagine how this might work:

  • Susan is a single parent, she works part-time on an 18 hour contract because of childcare commitments. She works for minimum wage in admin, and has just found out from a colleague that minimum wage is increasing. This is really useful because it means she might be able to put aside more money per month for things like fuel and food. Because Susan works 18 hours per week every week, she will earn more than she did before the minimum wage increase and will remain below the Personal Allowance threshold each year. This means that she will not need to pay any extra tax and her wages will rise.
  • Nicky works in retail on a part-time basis for 20 hours per week, which is ideal because she can plan her hours around picking up the kids from school. She has read online that minimum wage will be increasing in April 2025. She thinks this is a good opportunity to start saving more money each month and starts to budget based on what her new income will be. As she is calculating this, she realises that she is going to be earning over £12,570 per year and will now have to pay income tax, which will take off a significant amount of her pay each month.

Nicky’s scenario is potentially the situation that many single parents could find themselves in due to the increase in minimum wage. This is especially true as it can be impossible to take full time work as a single parent.

 

How minimum wage increasing will affect Universal Credit

How much money you earn and how often you are paid affects how much Universal Credit you will get. You can find out more about how your earnings affect how much Universal Credit you will receive.

When you claim Universal Credit you agree to fulfil certain criteria by signing a Claimant Commitment.  The Administrative Earnings Threshold (AET) is the amount of money you can earn which affects what criteria you will be asked to agree to. You will have assessment periods which determine all of this at the Job Centre.

If you earn below the AET in an assessment period, you must prove that you’re actively looking for work which will pay you more and you must also be available for work. You will also see a work coach who will talk through your job search with you.

If you earn the AET or above it, you don’t need to keep looking for work and you won’t need to see a work coach.

If you are paid minimum wage, your wage will increase in April 2025, but because the AET has not increased, you may find that your Universal Credit amount will decrease or that you are asked to fulfil different criteria in order to receive Universal Credit.

 

If you are feeling confused or overwhelmed by this information

If you are confused by any of this information, you can ask at your Job Centre or call our helpline between 9:30am and 4pm between Monday and Friday on 0808 801 0323.

If you would rather speak to us online, you can use our live web chat or you can email us on advice@opfs.org.uk.

Our skilled Advisors are here to listen to you without stigma or judgement for whatever you need. Whether it’s just to vent, ask questions, find out information about benefits, or if you’re looking for general support – we’re here for you.

The longest you will have to wait for a response will be between the hours of 4pm on Friday and 9:30am the following Monday. We will get back to every question, query, phone call and message as quickly as possible.

Benefits amount increase

Benefits will go up by 1.7% in April 2025. This will affect you if you are under State Pension age and on benefits issued by the Department for Work and Pensions (DWP) such as Universal Credit and Child Benefit.

You can ask about this at your Job Centre and more information will become available as we get closer to the date of changes.

You can earn more and still get the Carer’s Allowance

The amount of money that you can earn per week in order to be eligible for Carer’s Allowance will increase. Currently, to be eligible you need to earn less than £151 per week after tax, National Insurance and expenses. In April 2025, this threshold will increase by around £30, meaning you can earn more and still claim Carer’s Allowance.

 

The Carer’s Allowance is becoming the Carer Support Payment across Scotland. Find out more about this change.

The changes to Carer’s Allowance will impact everyone in Scotland who is still receiving Carer’s Allowance when these changes happen. For example, if you have not yet been moved over to Carer Support Payment by April 2025 when these changes come into effect.

We will find out how the Carer Support Payment will be affected in December through the announcement of the Scottish Budget.

Deductions to Universal Credit

If you are on Universal Credit and you owe money to a company, that company can apply to automatically be paid part of your Universal Credit payment, but only from the Standard Allowance element. We have more information on the different Universal Credit elements and how much each one pays.

At the moment, the company are able to take up to 25% of your Standard Allowance Universal Credit income. In April 2025 when the Budget changes are put in place, they will only be able to take up to 15% of your Standard Allowance Universal Credit income.

The company may be able to take money that you owe them for things like rent, Council Tax, child maintenance and court fines. This is known as a “third party deduction.”

What if I need more urgent help?

  • If you are unsure about any of this information, we are happy to help. Call our helpline between 9:30am and 4pm between Monday and Friday on 0808 801 0323. If you would rather speak to us online, you can use our live web chat or you can email us on advice@opfs.org.uk.
  • We have a page which is dedicated to crisis support
  • Advice and information on reducing your living costs, including help with your fuel costs
  • Link to our page about the Scottish Welfare Fund, which provides help to those in urgent need of money to pay for food, fuel or essential household items
  • We have a budgeting and debt planner available free to use
  • If you are unsure about what benefits you can claim, Turn2Us has a useful benefits calculator which can help you to find out what you are entitled to. You can also contact our Helpline and we can run a credit check for you
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