Today marks a pivotal policy change for people in supported accommodation who have long faced barriers to work – the end of the Supported Housing Work Disincentive. This is a perverse anomaly in the benefits system where thousands of people, including those that St Mungo’s supports, have faced a cliff edge in financial support as their benefits reduce so sharply that they are left worse off by working more.
Alongside homelessness sector partners Centrepoint and Depaul as well as many others, this change is something that St Mungo’s has long advocated for.
Recent figures from the Department of Work and Pensions projects that 325,000 people will be affected by this change. Many people living in supported accommodation want to work more hours but can’t because they face a cliff-edge in financial support. The rate at which Universal Credit and Housing Benefit is withdrawn for people in work means they quickly become liable to pay the high rents and service charges associated with supported accommodation out of their wages.
Working more than a few hours a week may make it impossible for people to afford their accommodation. As a result, people who want to work are being prevented from doing so. It can also risk a return to homelessness if people build up significant rent arrears.
We have seen heartbreaking cases of people not being able to take on extra hours – potentially losing their job as a result – because of the Supported Housing Work Disincentive. However, this policy change will put paid to that. It’s people like Claudia who will benefit massively from this change:
Claudia is 27 years old. She lives in supported accommodation, and her rent is £400 a week. Claudia is on Universal Credit (UC) for her personal money and gets the standard allowance for a single person of her age, which is £424.90 a month. As she is in supported accommodation she is entitled to Housing Benefit (HB) for her rent.
Claudia starts work and is earning £750 a month. The first calculation done is to see if she can still get UC. A 55% taper is applied to her wage. This means £750 x 55% = £412.50 is compared to her standard allowance. As her standard allowance is £12.40 higher than her tapered earnings, she continues to get UC at £12.40 a month.
As she gets some UC she continues to receive her full Housing Benefit entitlement.
In April 2026 her earnings increase to £900 a month net. Using the same UC calculation, Claudia is no longer entitled to UC (£900 x 55% = £495 – higher than her standard allowance). Housing Benefit now needs to be recalculated as she has lost entitlement to a full housing benefit award.
Under the pre 5/10/26 Housing Benefit earnings disregard rules
Housing Benefit is a weekly benefit. They only disregard the first £5 of her net earnings a week. They compare her now weekly wage of £207.69 per week income to the HB personal allowance for someone her age, which is £95.55 a week. She has excess income of £112.14 a week, HB take into account 65% of this which is £72.89 a week.
Claudia’s Housing Benefit is reduced by £72.89 a week and she has to pay this shortfall towards her rent out of her earnings.
This is known as the ‘cliff edge’ – Claudia earns an extra £150 a month, but has to pay £315.87 towards her rent as a result, so is considerably worse off by increasing her wage
Under the new Housing Benefit earnings disregard from 5/10/26 – an additional earnings disregard
Housing Benefit will disregard £5 + £ 77.73 a week of her £207.69 earnings a week. This reduces the amount of wages taken into account in the calculation. The rest of the calculation is the same. £207.69 – £5 – £77.73 = £124.96 – £95.55 X 65% = £19.12
Her Housing Benefit is now only reduced by £19.12 a week and she needs to contribute this towards her rent.
Outcome – Claudia is £53.77 a week/ £233 a month better off with the new earnings disregard.
Emma Haddad, CEO of St Mungo’s, said:
“St Mungo’s has long campaigned for this change, so we absolutely welcome this landmark moment in removing barriers to work for people living in supported accommodation.
“For many people, work is a way to build up financial resilience, independence, and supports with maintaining and sustaining a home. But for people living in supported housing, work has often felt out of reach. It is reasonable for benefits to reduce as earnings rise, however, the system that is being replaced withdrew support so sharply that people were left worse off by working more. We have seen heartbreaking cases where people had to choose between earning and keeping their accommodation because of this perverse anomaly in the benefits system.”
St Mungo’s offers a number of employment services to help people build the confidence and skills to get back into work. Clients who engage with our Employment Support service are one and a half times more likely to move into settled accommodation than the wider St Mungo’s client group: 52%, compared with 34%. Employment gives people more than an income. It builds the routine, confidence and connections that make moving on possible, and make it last.
