Big Changes Coming to DWP with Government Transition – What Are They and Are You Affected?

As we step into July, significant changes are coming to how people in the UK manage their money. From updates in energy prices and bank fees to changes in benefit systems, knowing these adjustments can help you manage your finances better. Here’s a detailed look at the big changes coming in the Department for Work and Pensions (DWP) and other areas.

Universal Credit

Starting June 2024, many people receiving old-style benefits will begin transitioning to Universal Credit. This includes those getting income-related Child Tax Credits and Employment Support Allowance. The shift aims to simplify the benefits system by merging several benefits into one. The transition will occur over three months, and according to the DWP, about 55% of recipients might see an increase in their payments. However, approximately 900,000 people could receive less money.

The transition is expected to be completed by March 2025, with some groups moving by 2028.

Energy Price Cap Reduction

From July 1, the energy price cap, which limits the amount energy companies can charge, will be reduced. This means the average dual-fuel household paying by direct debit will see their annual bill drop from £1,690 to £1,568, a 7% decrease. This change is designed to protect consumers from high energy rates, offering more financial relief.

Bank Fees Increase

Lloyds Bank will increase the monthly fees for some of its packaged accounts in July. These accounts offer benefits like mobile phone insurance and travel insurance. Here are the details:

• Club Lloyds Silver Account: Fees will increase from £10 to £11.50 per month.
• Club Lloyds Platinum Account: Fees will rise from £21 to £22.50 per month.
• Club Lloyds Account: The basic fee is £3, waived if you deposit £2,000 or more monthly.

Customers need to assess whether these accounts still provide good value for their needs. While some might find the benefits worthwhile, others may look for cheaper options.

Inflation and Interest Rates

The Office for National Statistics will announce the latest inflation data on July 17, 2024. Inflation measures how much prices for goods and services have changed over the past year. Recently, inflation has hit the Bank of England’s target of 2%, down from a high of 11.1% in October 2022. This drop indicates that prices are stabilizing, potentially affecting consumer confidence and economic policies.

The July inflation data will be significant for the Bank of England’s decision on interest rates. If inflation remains around 2%, the bank might lower interest rates, making borrowing cheaper and stimulating economic activity.

Barclaycard

Starting July 22, Barclaycard will reduce the minimum monthly payments required from cardholders. The new minimum payments will be the highest of three options: 1% of the balance, 1% of the balance plus interest, or £5. While lower payments can alleviate financial stress now, debts will take longer to repay and cost more in interest over time. For example, a £1,000 balance that previously took about nine years and eight months to clear with £699 in interest could now take 19 years and three months with interest totaling approximately £1,655.

Potential PIP Changes

The Personal Independence Payment (PIP) is a benefit that helps adults with the extra cost due to long-term disability or illness. The Government is considering changes to PIP, potentially moving from regular payments to vouchers. The public consultation on these changes will close on July 23. This is the last chance for people to give their input, which will help shape the final decision.

Important Dates to Remember

• July 31: Self-assessment taxpayers should make advanced payments toward their yearly bill. This mainly affects self-employed individuals and those with untaxed income.
• End of July: Tax credit recipients should renew their claims to ensure eligibility and accurate information. Failure to renew can terminate benefits, affecting your financial situation.

These upcoming changes highlight the importance of staying informed and planning ahead. Keep visiting our website to stay updated on these new changes and optimize your financial health.

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