Hundreds of thousands of households across the UK will be affected by changes to benefits from April – part of government plans for the biggest shake-up of the welfare system for decades.

Ministers argue the changes are necessary to tackle the rising cost to the taxpayer and cut the budget deficit. They also say it will simplify the system and provide greater incentives for people to work.

However, charities and opposition politicians say the moves will force families into rent arrears and increase homelessness.

What are the key changes, who will be affected and by how much?

From the end of April, the current system of working-age benefits and Tax Credits will be gradually replaced by a new benefit called universal credit. Millions of claimants will be affected.

Universal credit – which applies to England, Scotland and Wales – will replace:

Income support
Income-based jobseeker’s allowance
Income-related employment support allowance
Housing benefit
Child tax credit
Working tax credit

The government estimates 3.1 million households will be entitled to more benefits as a result of universal credit. Some 2.8 million households will be entitled to less, but will receive a top-up payment to protect them from a drop in income. New claimants will receive the lower payment.

The transition to Universal Credit will take place in three phases over four years, between 2013 and 2017.

From 29 April 2013, it will be trialled in Ashton-under-Lyne, Tameside, Greater Manchester, before rolling out to Oldham, Wigan and Warrington in July.

The government says the new scheme will mean people are better off in work than on benefits.

Across all households, ministers say there will be an average gain of £16 per month.

From October, more claimants will move on to universal credit as and when they have a significant change of circumstances, such as starting a new job or when a child is born.

Then, from April 2014 until October 2017, the rest of those affected will be moved onto universal credit in stages.

Universal Credit will be rolled out in Northern Ireland from April 2014, six months after rollout in the rest of the UK begins.

For more information about universal credit, visit the Department for Work and Pensions website.

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