More than 325,000 people living in supported housing and temporary accommodation are set to keep more of their earnings under new Housing Benefit rules which have now come into force.
The Department for Work and Pensions says the changes, which took effect on 5 October 2026, are designed to remove a financial “cliff edge” which could previously leave some residents worse off after taking a job or increasing their working hours.
The reforms introduce five new earned-income disregards for eligible working-age Housing Benefit claimants living in specified supported accommodation and temporary accommodation. Nearly 50,000 young people starting out in employment are among those the Government says could benefit.
Why have the Housing Benefit rules changed?
People living in some forms of supported housing and temporary accommodation can receive Universal Credit towards their day-to-day living costs while their rent continues to be supported separately through Housing Benefit.
Until now, the two systems have treated earnings differently. As earnings increased, Universal Credit could reduce and eventually end, after which earnings were assessed under Housing Benefit rules. For some claimants, the resulting reduction in Housing Benefit could be greater than their increase in earnings.
The DWP says this could leave some people with lower overall income despite working more — creating what the Government describes as a financial “cliff edge”.
Five new earnings disregards
Under the new rules, an additional amount of earnings is ignored when calculating Housing Benefit for eligible working-age claimants.
- £61.41 for single claimants and lone parents aged under 25;
- £77.73 for single claimants and lone parents aged 25 or over;
- £97.33 for couples where both members are under 18;
- £61.53 for couples where at least one member is 18 or over but both are under 25; and
- £119.70 for couples where at least one member is aged 25 or over.
The new amounts apply in addition to existing standard earnings disregards for which a claimant qualifies. They cover employed and self-employed earnings and there is no minimum-hours requirement.
The DWP says the values will be reviewed annually to reflect Universal Credit uprating and any future changes to the Universal Credit taper.
Changes apply automatically
DWP guidance says the new disregards apply automatically to eligible new and existing Housing Benefit claims from 5 October. Claimants must still report changes to earnings, employment, household circumstances or accommodation in the normal way.
The reforms do not create a new Universal Credit work allowance and do not mean Housing Benefit will stop reducing as earnings rise. They are designed specifically to mitigate the cliff-edge effect created by the interaction between Universal Credit and Housing Benefit for these claimants.
Government says nobody made worse off by reform
The Government says no group will be made worse off by the change itself, although the immediate financial gain will vary according to individual circumstances and the existing Universal Credit and Housing Benefit tapers.
Prime Minister Andy Burnham said people should not have to choose between keeping a roof over their head and being able to work, describing the measure as part of the Government's wider welfare reform programme.
Social Security and Disability Minister Sir Stephen Timms said the previous system had discouraged some vulnerable residents from working and said the changes were intended to ensure increasing working hours left people better off.
Part of wider welfare-to-work programme
The Government says the measure forms part of its wider employment programme, alongside £3.5 billion of employment support and youth employment reforms.
The policy was announced at the Autumn Budget 2025. The first regulations were laid before Parliament on 6 July 2026, followed by further amendments in September to ensure the new system operated as intended.
The new earnings disregards came into force on 5 October 2026.