Welsh Index of Multiple Deprivation (WIMD) 2025 technical report - Income domain

The purpose of this domain is to measure the proportion of people experiencing deprivation relating to low income. The income domain has a relative weight of 22% in the overall WIMD 2025 index.

The income domain has one indicator made up of several components, a cross-sectional snapshot of people in receipt of income-related benefits and tax credits and supported asylum seekers.

It involves non-overlapping counts of means-tested claimants: both those that are out-of-work, and those that are in work but who have low income. The summed counts are then expressed as a percentage of the estimated total population for the LSOA.

Type of indicator

Percentage

Numerator

The domain numerator captures the following categories of claimant, their dependent partners and children, as of end March 2024: 

• ‘Legacy’ out-of-work means-tested benefits
  • income support
  • income-based Jobseeker’s Allowance
  • income-related Employment and Support Allowance
• Pension Credit (Guarantee)
• Universal Credit (UC) ‘out of work’ conditionality groups
  • no work requirements
  • planning for Work
  • preparing for work
  • searching for work
• UC ‘in work’ conditionality groups, with equivalised income below 70% UK median threshold (after housing costs, AHC)
  • working with requirements
  • working, no requirements
• Housing Benefit, with estimated equivalised income below a 70% UK median threshold (AHC)
• Tax Credit, with estimated equivalised income below a 70% UK median threshold (AHC)
• Asylum seekers in dispersed accommodation in receipt of support

Denominator

The overall (de-duplicated) count is then expressed as a proportion of the total population of the LSOA. The denominators are the mid-2022 small area population estimates (SAPE) published by the Office for National Statistics (ONS) on 25 November 2024.

Source and time period

• The Department for Work and Pensions (DWP): income-related benefit claimants, and people on UC as at end March 2024
• His Majesty’s Revenue and Customs (HMRC): tax credit recipients as at end March 2024
• Home Office: Supported Asylum Seekers as at March 2024
• ONS: mid-2022 small area population estimates

The choice of snapshot at end of March 2024 captures the point at which managed migration of Tax Credit-only to UC claimants is complete, but before the migration of Housing Benefit-only to UC claimants.

Additional notes

Using DWP’s Registration and Population Interaction Database (RAPID), Single Housing Benefit Extract (SHBE) and UC monthly database, different groups (certain claimants, their dependent partners and children) are identified according to specific criteria across a range of benefits, ensuring that all relevant individuals are captured for the domain as of the end of March 2024. A full description of the criteria and data sources is included in the English indices of deprivation 2025 technical report (Ministry of Housing, Communities and Local Government, MHCLG), with some further detail below.

The income-deprived population is divided into two groups: out-of-work and in-work benefit units (claimants, along with any partners and dependent children). All out-of-work units are classified as income deprived. Any in-work units with income below a certain threshold are classified as income deprived. The threshold is 70% of median after housing costs (AHC) income, equivalised using the Modified OECD scale, and was derived using Family Resources Survey (FRS) data underpinning the Households Below Average Income (HBAI) publication.

UC ‘in-work’ conditionality groups with equivalised income below 70% UK median threshold (AHC)

These are benefit units in receipt of UC where one or more working age adult is in work, but where the equivalised household income is below the specified threshold. Income was calculated for March 2024 using UC assessment data, including earnings and UC payments but excluding health or caring-related entitlements and disability benefits. Actual housing costs reported to UC were deducted to produce an AHC income figure.

Housing Benefit claimants with estimated equivalised income below 70% UK median threshold (AHC)

This includes Housing Benefit claimants, partners and dependent children who do not receive out-of-work legacy benefits, Pension Credit Guarantee, or UC, and whose equivalised income is below the specified threshold. Income is calculated from employment, self-employment, State Pension, Tax Credit, Child Benefit, Pension Credit Savings Credit, and Housing Benefit, excluding disability benefits and actual housing costs. Housing costs were sourced from the Single Housing Benefit Extract (SHBE).

Tax Credit claimants with estimated equivalised income below 70% UK median threshold (AHC)

This includes Tax Credit claimants, partners and dependent children who do not receive out-of-work legacy benefits, UC or Housing Benefit, and whose equivalised income is below the specified threshold. Income is composed of estimated income from employment, self-employment and Tax Credit, excluding disability benefits and estimated housing costs.

As actual housing costs are not available for Tax Credit benefit units, an imputed value is used. This is calculated by averaging the housing costs of similar UC families (by family type and LSOA), providing a geographically and demographically sensitive estimate.

Asylum seekers in dispersed accommodation in receipt of support

The numerator includes the number of asylum seekers (adults and children) in an LSOA who were in dispersed accommodation and in receipt of any of the following support:

• Section 95, for those awaiting a decision, providing accommodation and living expenses
• Section 98, temporary support for those awaiting a Section 95 decision
• Section 4, for those who have been refused asylum but have not left the UK 

The income deprivation indicator is not directly comparable with that for WIMD 2019. Some of the reasons for this are:

• a change in coverage to include those claiming only Housing Benefit below an income threshold
• a change to the income threshold applied to working families (previously 60% of median before housing costs (BHC)), to better align with DWP deprivation measurement work and to reflect that administrative microdata now enables a direct AHC approach
• a change in the underlying welfare system with rollout of UC replacing several other benefits (known as legacy benefits) and using different eligibility criteria and thresholds
• an underlying increase in working age benefit claimants (DWP) during the pandemic that had not returned to the pre-pandemic baseline in this data
• updated definitions for asylum seekers in dispersed accommodation receiving support
• prisoners are now included in the denominator, as some benefits (e.g., Housing Benefit or UC housing element) may apply during initial custody periods

For the 2025 indicator, non-claiming partners of claimants were included in numerators, and claimants of both DWP benefits and HMRC tax credits were removed, to avoid double counting. These are both improvements to the previous Welsh income domain, which cancel each other out to some extent. The net impact of these two changes on the absolute and relative positions of small areas within Wales has been found to be very small.

The indicator values are ranked, then ranks exponentially transformed to form domain scores for use in the calculation of WIMD 2025. The domain has a relative weight of 22% in the overall index.

The introduction of UC, and other policy and data developments have had a significant impact on the measurement of the income domain of WIMD. The English indices of deprivation team at the MHCLG have worked with the key data suppliers, DWP, to develop a new income deprivation indicator for small areas that incorporates both UC and legacy benefits. This work has been undertaken both for small areas in England and in Wales.

Previously, for WIMD 2019 reference periods, most UC claimants were single jobseekers, so all UC claimants (except those in the “working no requirements” group) were included without applying an income threshold. Since that time UC has become the default for all new means-tested benefit claims, replacing legacy benefits and Tax Credits. Although full migration to UC is scheduled for March 2026, many claimants remain on legacy benefits, leading to a combined approach for 2025.

For 2025, the population is divided into two groups: out-of-work and in-work benefit units. All out-of-work units are included in the domain, as in previous indices, covering UC and legacy benefits. For in-work units, an income threshold determines inclusion, continuing the approach used previously but with major enhancements.

The new method provides a comprehensive, methodologically robust approach and improves accuracy by reflecting real living conditions. Future indices are expected to build on these improvements, continuing the goal of providing the most robust measure of income deprivation possible.

We have adopted the approach recommended by DWP and MHCLG and support better comparability between indices for different nations of the UK, where appropriate.

The key change is the shift from before housing costs (BHC) to after housing costs (AHC) for assessing in-work benefit units. This provides a more accurate measure of deprivation by accounting for actual housing costs, which may exceed housing-related benefits, reducing disposable income.

The change was enabled by improved data integration through RAPID, which consolidates UC, legacy benefits, and Tax Credits, and links to the Single Housing Benefit Extract (SHBE) and UC monthly datasets.

These linkages allow reliable calculation of income and housing costs, grouping individuals into benefit units and supporting income equivalisation. For the first time, Housing Benefit families are included in the numerator if their incomes fall below the deprivation threshold. Previously, technical difficulties in avoiding double counting prevented inclusion of this data. The use of RAPID now resolves this.

Two additional indicators were created, which are subsets of the income deprivation indicator. These are income deprivation for children (aged 0 to 15) and income deprivation for older people (aged 60 or over).