Nine money changes affecting your wallet in May – including Universal Credit shake-up, childcare help and fee hike
MILLIONS of households will be affected by a raft of money changes in May.
Ranging from Universal Credit shake-ups to extra childcare help and energy bill announcements, we round up everything you need to know below.
It follows a heavy April for personal finance changes too on the back of the new tax year.
1. Probate fees hiked – May 1
Grieving families will be hit by a 10% increase to the cost of applying for probate on May 1, The Sun exclusively revealed in April.
The fee will rise from £273 to £300.
Probate is the legal process of dealing with a person’s death.
You must apply to HM Courts & Tribunals Service to get probate, either by visiting www.gov.uk/applying-for-probate or by post.
It’s only payable if the person’s assets are worth £5,000 or more – otherwise, there is no charge.
The fee hike comes as analysis has found that the number of probate cases taking over a year to be granted has risen by 65% over the last three years.
2. Benefit payment date changes – May 6 and May 27
The two bank holidays on May 6 and May 27 are impacting benefit payment dates in May.
For Universal Credit, for example, your usual payment date depends on when you first applied and when your application was approved – there is no set day for everyone.
Most people receive their first payment seven days after the end of their initial assessment period.
If your usual payment date falls on the bank holidays, you’ll get the money on the previous working day instead.
That means you won’t be left waiting for cash over the long weekend.
In other words, if you’re expecting a payment on Monday, May 6, you’ll likely get it on Friday, May 3, instead.
And if you’re due the cash on Monday, May 27, you should get paid on Friday, May 24.
As well as Universal Credit, 11 other benefits will also be affected by the bank holidays. These are:
- Attendance allowance
- Carer’s allowance
- Child benefit
- Disability living allowance
- Employment and support allowance
- Income support
- Jobseeker’s allowance
- Pension credit
- Personal independence payment
- State pension
- Tax credits (such as Working Tax Credit)
Income support, jobseekers’s allowance and pension credit payments usually arrive every two weeks while the rest arrive every four weeks.
The amount you’re due should remain the same.
However, don’t forget that if you get paid early then you’ll have to make the money you get go further, as you’ll have extra days to wait until your next payment date.
If you don’t receive your benefit payment one working day before the bank holiday, contact the DWP directly.
3. Natwest to start closing Buy Now, Pay Later accounts – May 7
NatWest will start closing Buy Now, Pay Later (BNPL) customers’ accounts from May 7.
The bank launched its BNPL product in the summer of 2022, but it’s understood to be ditching it due to lower than anticipated use, The Sun revealed earlier this year.
Natwest’s BNPL product allowed customers to pay off purchases with no interest over four monthly instalments.
Customers who have active plans will have their accounts closed once their repayment periods come to an end, so customers don’t need to do anything.
BNPL products allow shoppers to defer or spread the cost of purchases over a set time frame interest-free.
Citizens Advice estimated around 15.1 million people relied on BNPL plans over the Christmas period.
4. Interest rate decision – May 9
Millions of households will be anxiously waiting for the next interest rate decision by the Bank of England (BoE) on May 9.
The Bank’s Monetary Policy Committee (MPC) has so far kept interest rates at 5.25% for five consecutive meetings.
This compares to a historic low interest rate of 0.1% in December 2021.
Banks and lenders use the BoE base rate to set the interest rates they offer customers on mortgages, loans and savings.
Unless the rate is changed, there is unlikely to be any immediate impact on these rates.
However, a rate cut would reduce mortgage costs for millions of households.
Previously, most analysts and investors have said they think the rate will not be cut until later this year.
What is the base rate and how does it affect the economy?
NINE members of the Bank of England's Monetary Policy Committee meet eight times each year to set the base rate.
Any change to the Bank’s rate can have wide-reaching consequences as it directly influences both:
- The cost that lenders charge people to borrow money
- The amount of savings interest banks pay out to customers.
When the Bank of England lowers interest rates, consumers tend to increase spending.
This can directly affect the country’s GDP and help steer the economy into growth and out of a recession.
In this scenario, the cost of borrowing is usually cheap, and the biggest winners here are first-time buyers and homeowners with mortgages.
But those with savings tend to lose out.
However, when more credit is available to consumers, demand can increase, and prices tend to rise.
And if the inflation rate rises substantially – the Bank of England might increase interest rates to bring prices back down.
When the cost of borrowing rises – consumers and businesses have less money to spend, and in theory, as demand for goods and services falls, so should prices.
The Bank of England is tasked with keeping inflation at 2%, and hiking interest rates is a way of trying to reach this target.
In this scenario, the losers are those with debt.
First-time buyers will lose out to cheaper mortgage rates, and those on tracker or standard variable rate mortgages are usually impacted by hikes to the base rate immediately.
Those on a fixed-rate deal tend to be safe if they fixed when interest rates were lower – but their bills could drastically increase when it’s time to remortgage.
The cost of borrowing through loans, credit cards and overdrafts also increases when the base rate rises.
However, the winners in this scenario are those with money to save.
Banks tend to battle it out by offering market-leading saving rates when the base rate is high.
5. Extra childcare help open for applications – May 12
Working parents of nine-month-olds will be able to apply for 15 hours of free childcare from May 12 ahead of its September rollout.
Families are being encouraged to apply early to ensure they secure a place with a provider.
It comes as working parents of two-year-olds started receiving 15 hours of free childcare from April.
Meanwhile, working parents of children aged nine months to three years will be able to access 30 hours of free childcare a week from September next year.
You can apply for free childcare hours on the GOV.UK website.
Once your application has been approved, you’ll get a code to give to your childcare provider.
Crucially, you have to reconfirm your eligibility every three months.
6. Earnings threshold change for Universal Credit – May 13
The so-called Administrative Earnings Threshold (AET) will rise from 15 to 18 hours per week from May 13, affecting 180,000 people on Universal Credit.
It means they will have to step up their search for work or face having their benefits cut.
The AET determines how much support an individual will receive to find work based on their current earnings and hours worked.
If someone earns below the AET, they are placed in the Intensive Work Search Group and required to meet regularly with their work coach.
Right now, this affects those working fewer than 15 hours a week and earning less than £743 per month or £1,189 for couples.
Following the change, anyone working fewer than 18 hours a week and earning less than £892 per month or £1,437 for couples will have fresh requirements to meet with DWP officials to find more work.
If you earn the individual AET or more, you do not need to look for more or better-paid work actively.
Additionally, if you’re in a couple and your combined earnings are equal to or higher than the couple’s AET, you or your partner do not need to actively look for more or better-paid work.
Universal Credit
HERE'S everything to know about Universal Credit:
- What is Universal Credit? Everything you need to know including how to apply
- Universal Credit calculator: How much can I claim and how do I apply?
- Universal Credit login: How do I sign in to my online account?
- How much can I earn before Universal Credit is reduced and do I get a work allowance?
- What is a Universal Credit advance payment? How to apply and pay it back
- Are Universal Credit payments going up and how much more will I get?
- How to claim Universal Credit if you’re self-employed
- How many hours can I work on Universal Credit and will my payment be reduced?
- What is a Universal Credit budgeting advance and how much could I get?
- What is the Universal Credit housing element and how much of your rent does it pay?
7. Santander to cut interest rate – May 20
Santander is slashing the rate offered on its popular Easy Access Saver Limited Edition (Issue 3) account on May 20.
It currently pays savers a competitive 5.20% on balances between £1 and £250,000, but this will fall to 4.20%.
All other terms of the account remain the same and customers can access their money at any time with no charges.
When Santander announced the move in March, it blamed the reduction of the savings rate on current market conditions.
If you are trying to find the best savings rate, do research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare to see what’s out there.
These websites let you tailor your searches to an account type that suits you.
Ulster Bank currently offers a Loyalty Saver easy access account paying 5.20% in interest, according to MoneyFacts.
8. Energy price cap announcement – May 24
The new energy cap for July to September will be announced by energy regulator Ofgem on May 24.
The cap is a limit on the maximum amount suppliers can charge standard variable tariff customers for each unit of gas and electricity and their standing charge.
It was first introduced in January 2019 to protect customers from being overcharged and currently affects 27million people.
Because the price cap is a limit on how much firms can charge you for your energy, it means what you pay depends on your usage.
The current April to July price cap is set at £1,690 a year for the typical direct debit customer using gas and electricity.
Analyst Cornwall Insights has predicted the next one to be £1,560 – a drop of £130 a year.
9. Benefit increase – throughout May
Millions on benefits face a payment boost delay due to how their welfare cash is paid.
Benefit payments rose by 6.7% from April, in line with the consumer price index (CPI) level of inflation for September 2023.
However, it’s important to note that while the new rates came into force on April 8, most will not see their payments rise until May.
This is because most benefits are paid monthly or twice monthly in arrears.
For example, if you usually receive your state pension payment on or before the 8th of each month, you won’t receive a payment boost until your May payment is due.
Millions on Universal Credit will also have to wait a bit longer to receive the uprating because of how the benefit is assessed.
It means that the date you’ll receive the pay boost will depend on when your last assessment period was.
Those whose assessment periods started before April 8 will see the benefits rise in May.
However, those whose assessment period started after this date won’t see it until June.
Check our guide for the full list of the new benefit rates for 2024-25.
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