Chancellor Rishi Sunak announced in the Budget that the ‘taper rate’ will be slashed – meaning that many people who work and claim Universal Credit will take home more money each month.

The taper rate is the amount of Universal Credit payments that claimants lose, as they work and earn more above a certain threshold. This is known as the ‘work allowance’.

The work allowance will increase by £500 per year from today. At the same time the taper rate is being reduced from 63% to 55%. This means that if someone earned £100 in a month above their work allowance, they will lose £55 from their Universal Credit payment, instead of £63. This means that those claiming the benefit will take home some more money each month.

The government claims the change will result in a cash boost of nearly £1,000 a year for many families and has been brought in a week earlier than planned.

Claimants will be notified how much Universal Credit they will be awarded in their usual monthly statement, with the first of those to reflect the changes being issued today.

Thérèse Coffey, work and pensions secretary, said: “From today, two million people will see their income boosted by £1,000 per year, on average, as we bring in an effective tax cut worth £2.2bn for the lowest paid.

“We are making the change earlier than planned which means up to 500,000 more households can benefit before Christmas.”

Rishi Sunak, chancellor of the exchequer, said: “We want this to be a country that rewards hard work by helping the lowest income families keep more of their hard-earned cash.

“That’s why at Budget, I announced an effective tax cut for 2 million people worth over £2bn. These changes come into force today and will mean that with Christmas approaching, hard-working families keeping an extra £1,000 a year of what they earn.”