For people living in temporary and supported accommodation, moving into work can sometimes mean facing a benefits trap that makes them financially worse off.

New rules are designed to remove that barrier, allowing more people to keep what they earn and giving them a better chance of building an income, confidence and a route towards a stable home.

It can mean having more money to live on, building confidence, meeting people, developing new skills and becoming more connected to the community. It can also be a crucial step towards being able to afford a home of your own.

But for people living in temporary or supported accommodation, the benefits system has not always made working more hours the obvious choice.

In fact, some people could find themselves financially worse off after increasing their hours or earnings.

That has now changed.

A change that makes work pay

From 5 October 2026, new rules mean that more than 325,000 people living in supported housing and temporary accommodation will be able to keep more of what they earn when they start work or increase their hours. (GOV.UK)

The problem was caused by the way Universal Credit and Housing Benefit interacted.

Many people living in temporary or supported accommodation receive Universal Credit to help with their living costs, while their rent is supported through Housing Benefit. As their earnings increased, their Universal Credit would gradually reduce.

That in itself is not unusual. Universal Credit is designed so that people keep some of their earnings as their benefits reduce.

The problem came when Universal Credit reduced to the point where Housing Benefit became the main benefit covering their housing costs. Housing Benefit had different, less generous rules for calculating earnings.

For some people, this created a cliff edge. They could work more, earn more and yet see their overall income fall. (GOV.UK)

In other words, the system could effectively say: you’re ready to take on more work, but doing so could leave you worse off.

That is hardly an incentive to get ahead.

The new rules introduce additional earnings disregards for eligible people in temporary and supported accommodation. This means more of their earnings can be ignored when Housing Benefit is calculated, smoothing out that cliff edge. (GOV.UK)

The Government estimates that around 50,000 young people starting out in work will benefit from the changes. (GOV.UK)

Why this matters for people experiencing homelessness

At Church Homeless Charity, we support people living in homelessness through grants of up to £200, helping them with practical things that can make a significant difference while they are getting their lives back on track.

Most of the people we support are living in temporary or supported accommodation.

For someone in this position, getting into work is not simply about having a wage coming in.

It can be about having somewhere to go each morning. Having colleagues. Building a routine. Having something to be proud of. Developing skills and confidence. Having money to make choices for yourself.

And ultimately, earning enough to move on from supported accommodation and into a more independent home.

That is why removing a financial barrier to work matters.

If someone can take a few more hours at work without worrying that they will suddenly lose so much housing support that they are worse off, they have a much better chance of increasing their income gradually.

They can start small. Build confidence. Gain experience. Take on more responsibility. Save some money.

And, eventually, be in a stronger position to move on.

That is social mobility in practice.

The benefits system should help people move forward

There is an important principle behind this change to the benefit trap: people should not be penalised for trying to improve their circumstances.

Someone living in temporary accommodation may already have overcome enormous barriers to get to the point where they are ready to work.

They may have spent months or years dealing with homelessness, unstable housing, poor mental health, addiction, family breakdown, domestic abuse or other challenges.

Getting a job can be a huge step.

The last thing that person needs is for the benefits system to make that step financially risky.

The Government’s own explanation of the change acknowledges that the previous system could trap people on benefits rather than supporting them into work and financial independence. (GOV.UK)

This is a relatively technical change to Housing Benefit rules. But its potential impact is very human.

It means someone can say yes to more hours.

Yes to a promotion.

Yes to a new job.

Yes to building up some savings.

Yes to becoming more independent.

And eventually, yes to moving on from supported accommodation.

That is exactly the kind of change that can help people break the cycle of homelessness.

But there is more to do

We have written before about the particular difficulties faced by young people experiencing homelessness.

Young people can be disproportionately affected by the benefits system because people under 25 generally receive a lower standard allowance of Universal Credit than people aged 25 and over.

That can be difficult to understand when the bills, rent and everyday costs facing a young person do not suddenly become cheaper because they are under 25.

As we highlighted in our previous article, young people can find themselves trapped in homelessness when low incomes, high housing costs and limited opportunities combine.

The changes introduced this month are a welcome step towards reducing the effects of the benefits trap.

But we would like to see the same thinking applied more broadly.

If the Government wants Universal Credit to support people into work rather than hold them back, then young people who are receiving the lower rate of Universal Credit also need to be considered.

They may have exactly the same determination to work, the same need for a safe home and the same everyday costs as someone a few years older.

People experiencing homelessness should not have to choose between making progress and keeping the support that keeps a roof over their heads.

Removing the financial cliff edge is a practical change that gives people more room to move forward.

Now we need to keep going.

Because for someone who has experienced homelessness, earning more, becoming more confident, getting connected to their community and eventually moving into their own home are not small things.

They are steps towards a different future.

Help someone take their next step

Changes to the benefits system can remove barriers, but people experiencing homelessness still need practical support while they rebuild their lives.

Your donation to Church Homeless Charity can help someone living in temporary or supported accommodation with something they need to move forward, from work equipment and travel costs to activities that build confidence and connection.

Your support can help someone take their next step towards a more independent future.