The Department for Work and Pensions (DWP) has confirmed a sweeping set of changes to Universal Credit, set to be implemented from next April. These reforms, now law under the Universal Credit Act 2025, promise to increase annual income for an estimated four million households.
Key Financial Changes and Support Increases
Central to the new legislation is a significant financial uplift. The Universal Credit standard allowance will rise permanently above inflation for the next four years. By the 2029/30 financial year, this is projected to be worth an extra £725 in cash terms for a single person aged 25 or over. The Institute for Fiscal Studies has highlighted that this marks the most substantial permanent real-terms increase to the main rate of out-of-work support since 1980.
Alongside this core increase, the DWP is tackling what it describes as a "fundamental imbalance" in the system. From April 2026, the health top-up for new claims will be reduced to £50 per week. However, important protections are in place. All existing recipients of the Universal Credit health element, as well as new claimants who meet the Severe Conditions Criteria or are under the Special Rules for End of Life (SREL), will continue to receive the higher health payment.
New Work Incentives and Protections for the Vulnerable
A cornerstone of the reform is the introduction of the "Right to Try Guarantee". This measure allows individuals receiving health and disability benefits to attempt a return to work without the immediate fear of having their benefits reassessed. This is designed to support those, such as people recovering from an illness, who feel their health has improved enough to try employment.
The Act also introduces robust safeguards for the most vulnerable. An estimated 200,000 people within the Severe Conditions Criteria group, who have the most severe and lifelong conditions, will be exempt from reassessment. Furthermore, all current beneficiaries and new claimants with severe conditions or 12 months or less to live are guaranteed that their combined standard allowance and health component will rise at least in line with inflation annually from 2026/27 to 2029/30.
Broader Context and Reaction
These changes are supported by a major investment of £3.8 billion over the Parliament for employment support targeted at sick and disabled people. This funding is part of the government's Pathways to Work guarantee, building on existing programmes like Connect to Work.
However, the reforms have not been without criticism. Thomas Lawson, CEO of the charity Turn2us, expressed concern, stating: "MPs voted to reduce support for people unable to work by over £200 a month. Halving the health element of Universal Credit for anyone who becomes sick from April 2026 will increase hardship." He urged the government to conduct a full review of the system in collaboration with disabled people and their representative organisations.
Concurrently, the DWP has announced a ministerial review of the Personal Independence Payment (PIP) assessment, led by Disability Minister Sir Stephen Timms. This review will be co-produced with disabled people and experts to ensure the system is fair and fit for the future.
