House of Commons Library

2016 Benefits Uprating

Published Friday, November 27, 2015

This note sets out the main benefit and tax credit rates for the 2016-17 financial year.

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Most working-age benefits will be frozen at 2015/16 cash values from 2016/17 to 2019/20 inclusive.

Over the year 2016/17, the increase in benefits aimed at disabled people and pensioners (not including the basic State Pension) will continue to be indexed to CPI inflation (-0.1%, meaning that these benefits will remain unchanged).

The basic State Pension will be uprated in line with the ‘triple guarantee’ (or ‘triple lock’) that was introduced in 2012/13. This ensures that it increases by the highest of the increase in earnings, price inflation (as measured by the CPI) or 2.5%. For the purposes of the 2016/17 uprating, the annual earnings rise figure (2.9%) was the highest of these three benchmarks.

Pension Credit Guarantee Credit is required to increase at least in line with earnings; in the year 2016/17 it will rise by 2.9%. This marks a change from the last five years, when the government decided to match the Pension Credit Guarantee Credit increases with the cash increase received by those on the full basic State Pension, in response to low annual earnings increases.  

A new single-tier State Pension will be introduced for people who reach pension age on or after 1 April 2016. This will consolidate the basic State Pension and Additional Pension into one single amount. The full amount of the new pension will be £155.65, but its value for individuals may be less depending on recipients’ National Insurance contributions.

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