As the new year approaches, millions across the UK continue to grapple with a severe cost of living crisis, with stagnant wages failing to keep pace with persistently high prices. While inflation fell to 3.2 per cent in November 2025, this only indicates a slower rate of increase, not a drop in the cost of essentials.
Critical Payment Dates for January 2026
Most Department for Work and Pensions (DWP) benefits, including Universal Credit, the State Pension, and Personal Independence Payment (PIP), will be paid as usual in January. However, due to the New Year's Day bank holiday, anyone scheduled to receive a payment on Thursday 1 January 2026 will be paid on Wednesday 31 December 2025 instead.
Similar adjustments apply for the Christmas period. Payments due on Christmas Day (25 December) or Boxing Day (26 December) will be issued on Christmas Eve (24 December).
The DWP is pressing ahead with its plan to migrate all legacy benefit claimants to Universal Credit, aiming for completion by the end of January 2026.
Available Financial Support and Upcoming Changes
Against a bleak economic backdrop, with 14 million adults reportedly skipping meals due to unaffordability, claiming all entitled support is vital. Experts estimate a staggering £24 billion in benefits goes unclaimed annually.
Significant changes to payment rates are coming in April 2026:
- Universal Credit standard allowance will rise by around 6.2%. For a single claimant over 25, this means an increase from £92 to £98 per week.
- Most other benefits, like PIP and Carer's Allowance, will increase by 3.8%, based on the previous September's inflation rate.
- The State Pension will increase by 4.8%, taking the weekly amount to £241.05.
However, a major cut is also scheduled. The health-related element of Universal Credit for new claimants will be slashed from £105 to £50 per month from April 2026, with rates for existing claimants frozen until 2029.
Key Schemes and Support to Apply For Now
Households struggling to cope should investigate the following forms of assistance:
Budgeting Advance Loans: Interest-free loans for Universal Credit claimants facing an emergency, with a new cap on repayments set at 15% of the standard allowance from April 2025.
Household Support Fund (HSF): This local council-administered fund provides help with bills, essentials, and cash grants up to £300. It runs until March 2026 before transitioning to a new Crisis and Resilience Fund.
Discretionary Housing Payment (DHP): Financial support for rent shortfalls or deposits, available through local councils for those receiving Housing Benefit or the housing element of Universal Credit.
Social Tariffs & Council Tax Reduction: Reduced rates for broadband, water, and council tax are available for those on low incomes or certain benefits. Eligibility varies by provider and local authority.
Energy Provider Help: Major suppliers like British Gas, Octopus, and E.ON offer schemes for struggling customers, including grants and free energy-saving devices.
Furthermore, the energy price cap is set for a minor increase of 0.2% in the first quarter of 2026, taking it to £1,758 for an average household. Experts advise consumers to compare fixed tariffs, as many now offer rates below the cap.
For parents, the rollout of 30 hours of free childcare for working parents of children under four is now complete, having been fully implemented from September 2025.
It is crucial to note that the government has not announced any continuation of the direct Cost of Living Payment scheme beyond February 2024. Individuals are urged to use online calculators and contact their local council or advice charities to ensure they are receiving all financial support available to them.
