Benefits and tax credits that are linked to inflation will rise by 1.7% in April 2020, marking the end of the four-year freeze that affected a range of working-age benefits and tax credits. The triple lock delivers a 3.9% increase to the New State Pension (£175.20 in 2020/21) and the Basic State Pension (£134.25).Jump to full report >>
This note sets out the main benefit and tax credit rates for the 2020/21 financial year.
Indexation of benefits in line with the Consumer Prices Index (CPI) resumes for all inflation-linked benefits and tax credits this year, resulting in a 1.7% increase. This follows a four-year period (2015/16-2019/20) during which most working-age benefits (except for disability and carer’s benefits) were held at their 2015/16 cash value, and a three-year period before that (2013/14-2015/16) when increases were limited to 1% per annum.
The Basic and New State Pensions continue to be uprated in line with the triple lock that was introduced in 2012/13 – that is, by the highest of the increase in earnings, price inflation (as measured by the CPI) or 2.5%. For the purposes of the 2020/21 uprating, earnings growth (+3.9%) was the highest of these three benchmarks, meaning that:
Pension Credit Guarantee Credit is required to increase at least in line with earnings. In 2020/21 it will also rise by 3.9%.
Commons Briefing papers CBP-8806
Authors: Roderick McInnes; Steven Kennedy