New HMRC and DWP Payment Rates Confirmed for April 2026
The Department for Work and Pensions (DWP) has officially announced proposed new payment rates set to take effect from April 2026. These changes will impact a range of key benefits, including the State Pension, Personal Independence Payment (PIP), Attendance Allowance, Universal Credit, and Carer's Allowance. Simultaneously, HM Revenue and Customs (HMRC) has confirmed the annual uprating for Child Benefit and Guardian's Allowance, aligning with inflation adjustments.
Child Benefit and Guardian's Allowance Increases
Child Benefit and Guardian's Allowance payments will see a rise in line with the Consumer Price Index (CPI) for the year to September 2025, which is recorded at 3.8 per cent. This adjustment means that from April 2026, the weekly rates will increase as follows:
- Child Benefit for the eldest child will climb from £26.05 to £27.05 per week.
- Child Benefit for additional children will increase from £17.25 to £17.90 per week.
- Guardian's Allowance will rise from £22.10 to £22.95 per week.
Since these payments are typically made every four weeks, the amounts translate to:
- Child Benefit, eldest child: £108.20
- Child Benefit, additional children: £71.60
- Guardian's Allowance: £91.80
Tax-Free Childcare Initiative
In addition to the benefit rate changes, working families are being strongly encouraged to register for Tax-Free Childcare. This scheme is particularly timely as it can assist with childcare costs during the upcoming school holidays and festive period. By using a Tax-Free Childcare account, families can save up to £2,000 per year for each child under the age of 11, or up to £4,000 per year for disabled children up to age 16.
Parents can utilise this scheme to cover approved childcare expenses, such as nursery fees for younger children, after-school care clubs during term time, or holiday clubs for the summer break. The UK Government demonstrated its support in June by distributing a total of £57.7 million in top-ups to Tax-Free Childcare accounts, providing an average of over £100 per family to help with childcare costs.
How Tax-Free Childcare Works
Tax-Free Childcare operates on a simple principle: for every £8 deposited into a Tax-Free Childcare account by parents, the UK Government adds £2. This means families can receive up to £500 every three months, or £1,000 for disabled children, to offset childcare expenses. Once an account is established, funds can be deposited and used immediately or saved for future needs. Any unused money can be withdrawn at any time, offering flexibility for families.
HMRC has highlighted that applying for a Tax-Free Childcare account online takes just 20 minutes, making it an accessible option for eligible households.
Eligibility Criteria for Tax-Free Childcare
Families may qualify for Tax-Free Childcare if they meet the following conditions:
- Have a child or children aged 11 or under (eligibility ends on September 1 after their 11th birthday). For disabled children, support may extend up to age 16.
- Earn, or expect to earn, at least the National Minimum Wage or Living Wage for an average of 16 hours per week.
- Each parent earns no more than £100,000 per annum.
- Do not receive Universal Credit or childcare vouchers.
A comprehensive list of eligibility criteria is available on the GOV.UK website for further reference.
