The Department for Work and Pensions (DWP) has announced that nearly 4 million households will receive an additional £725 in Universal Credit payments by the end of the decade. The increase, part of a 'rebalancing' of the benefit, aims to help households cope with the cost of living crisis. According to charity Save The Children, 59% of Universal Credit claimants are in work and rely on the extra income.
From April 6, 2026, the basic Universal Credit rate will rise by £295 per year, accumulating to £725 by 2029/30 for a single person aged 25 or over. The standard allowance for a single person under 25 increased from £316.98 to £338.58 per month, while for those aged 25 or over it rose from £400.14 to £424.90. Couples under 25 now receive £528.34 per month, up from £497.55, and couples over 25 get £666.97, up from £628.10.
However, the Universal Credit Health Element for new claimants has been cut nearly in half, from £429.80 to £217.26, as the government seeks to reduce the rising welfare bill. The two-child benefit cap has also been removed, meaning the Child Element—£351.88 per month for the first child and £303.94 for each additional child—is no longer limited to two children, though it remains subject to the overall benefits cap.
Announcing the changes, the DWP stated: 'For the first time ever, the Universal Credit standard allowance will permanently rise above inflation, amounting to £725 by 2029/30 in cash terms for a single person aged 25 or over. This is the highest permanent real terms increase to the main rate of out-of-work support since 1980, according to the IFS.' The reforms aim to address the 'fundamental imbalance' in the system that creates perverse incentives driving people into dependency.
