Millions to see Universal Credit payments rise to £1,200 a month in Budget boost

The Department for Work and Pensions is to bring in new payment levels for Universal Credit from next April. Chancellor Rachel Reeves confirmed the benefits uprating in Labour's new Budget on October 30.

Ms Reeves says Universal Credit and most other DWP and HMRC benefits will go up by 1.7 per cent, in line with September's Consumer Price Index. Analysts had called for the October inflation level of 2.2 per cent to be used instead, because the State Pension will go up by a much higher 4.1 per cent, creating a widening payment gap they say should be closed.

Around seven million people are on Universal Credit, with numbers increasing rapidly due to claimants being moved across from older benefits such as tax credits, Income Support and income-related Employment and Support Allowance (ESA). The new payment rates for all DWP and HMRC benefits will provide additional support to a total of 39.5 million people in Britain, the government said, including 3.9 million in the West Midlands. The regional figure includes 1.1 million children, a similar number of pensioners and 1.7 million people of working age.

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In new guidance following the Budget, the Government shared four payment levels for Universal Credit from next April. These don't cover all possible scenarios but include many of the main claim types handled by the DWP. Under the examples below, some couples with two children will see monthly Universal Credit amounts rise to just over £1,200 - although this isn't the maximum that can be claimed.

Universal Credit, single, aged 25-plus

Current monthly amount 2024/2025: £393.45

New monthly amount 2025/2026: £400.14

Increase in monthly benefit amount: £6.69

Annual amount (12 months): £4,801.68, a rise of £80.26

Universal Credit, single, aged 25-plus with LCWRA incapacity element

This includes those who have had a work capability assessment and are in the top incapacity group for LCWRA (limited capability for work and work-related activity), meaning they are not required to look for work because of ill-health.

Current monthly amount 2024/2025: £809.64

New monthly amount 2025/2026: £823.41

Increase in monthly benefit amount: £13.77

Annual amount (12 months): £9,880.92, a rise of £165.24

Universal Credit, single, aged 25-plus and one child (born on or after April 6, 2017)

Current monthly amount 2024/2025: £681.37

New monthly amount 2025/2026: £692.95

Increase in monthly benefit amount: £11.58

Annual amount (12 months): £8,315.40, a rise of £138.96

Universal Credit, couple, at least one adult aged 25-plus and two children (born on or after April 6, 2017)

Current monthly amount 2024/2025: £1,193.44

New monthly amount 2025/2026: £1,213.72

Increase in monthly benefit amount: £20.28

Annual amount (12 months): £14,564.64, a rise of £243.36

In addition, more than a million families will also receive more Universal Credit through lower debt deductions. The Budget confirmed that the maximum level of such deductions - to claw back arrears in rent, council tax or utility bills, or to repay benefit loans and tax credit overpayments - will be capped at 15 per cent, rather than the current 25 per cent.

The move will help 1.2 million families, including 700,000 with children. Some of the poorest households will now be £420 better off as a result of this change. Save the Children estimates single parents could receive up to £39 more of their Universal Credit entitlement each month. For two-parent families, this could be up to £62. Two-thirds of children in Universal Credit households are pushed deeper into poverty by benefit deductions, researchers said.

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