The Department for Work and Pensions (DWP) has announced significant changes to Universal Credit that will affect millions of households across the UK. Starting in May 2025, these adjustments include an increase in benefit payments, rescheduling of payment dates, and a reduction in the amount deducted from benefits for those in debt.
As part of the annual uprating, Universal Credit claimants will receive an additional £150 over the course of the year, benefiting approximately 5.7 million working-age households. This increase follows a 1.7% rise in working-age benefits, which also applies to disability benefits such as Disability Living Allowance and Carers Allowance.
A spokesperson for the DWP stated, "People in receipt of Universal Credit and other benefits including Personal Independence Payments will see their payments increase by 1.7% with 5.7 million households on Universal Credit to gain £150 on average." This boost comes at a critical time, as many households continue to grapple with the ongoing cost of living crisis.
Chancellor of the Exchequer Rachel Reeves emphasized the government’s commitment to supporting those in need, stating, "With today’s increase in working-age benefits, and our ironclad commitment to pensioners through the Triple Lock, we are making the decisions that support those who need it in Britain, putting money into people’s pockets and delivering our Plan for Change."
In addition to the £150 increase, the DWP has announced that 1.2 million of the poorest households claiming Universal Credit could receive an extra £420 annually. This is a result of changes to the Fair Repayment Rate, which sets the maximum amount deducted from benefits for debts. Starting from April 30, 2025, this rate has been lowered from 25% to 15%, allowing households to retain more of their benefits.
The DWP spokesperson noted, "The new rate is designed to ensure money is repaid where it is owed, and people can still cover their day-to-day needs." Chancellor Reeves added, "As announced at the budget, from today, 1.2 million households will keep more of their Universal Credit and will be on average £420 better off a year. This is our plan for change delivering, easing the cost of living and putting more money into the pockets of working people."
Alongside these financial changes, the DWP is also implementing operational adjustments to Universal Credit. With 7.6 million people currently claiming Universal Credit, the government is in the final stages of migrating claimants from older benefits like Income Support and Jobseeker's Allowance to Universal Credit. This transition is expected to accelerate in the coming months, particularly for those on income-related Employment and Support Allowance (ESA).
The DWP has announced that it will issue 83,000 Migration Notices each month, with the final notices scheduled for September 2025. This initiative aims to ensure that all legacy claimants are transitioned to Universal Credit before the end of the financial year. The increase in claimants has been notable, with an additional 137,000 people joining the Universal Credit system between February and March 2025.
Furthermore, significant adjustments are being made to payment schedules due to the May bank holidays. Payments that would typically fall on bank holidays will be brought forward. For instance, payments due on May 3, 4, or 5 will be made on May 2, and those due on May 24, 25, or 26 will be paid on May 23. This ensures that claimants receive their benefits without delay during holiday periods.
The DWP is also raising the Administrative Earnings Threshold (AET) for Universal Credit claimants, reflecting recent increases in the National Living Wage. The AET has been adjusted to £952 per month for single claimants and £1,534 for couples, up from £892 and £1,437, respectively. This change requires claimants earning below these thresholds to increase their work hours or seek higher-paying jobs.
Moreover, the incapacity payment for those classified as having 'limited capability for work and work-related activity' (LCWRA) is set to increase from £416.19 to £423.27 per month starting May 13, 2025. However, this will be the final increase for the LCWRA payment, which will be frozen from April 2026, meaning new claimants will receive a reduced amount compared to current recipients.
Despite these changes, the DWP has clarified that there will be no new cost of living payments made directly by the department. This announcement was made to counter misinformation circulating online. Instead, the government has extended the Household Support Fund through March 31, 2026, with an additional £742 million allocated to assist low-income households. The fund will reopen in June 2025, providing eligible individuals with the opportunity to apply for a £200 hardship payment.
As the DWP rolls out these changes, it remains crucial for claimants to stay informed about their benefits and any adjustments that may affect their financial situations. With the ongoing economic pressures, these changes aim to provide some relief to millions of households across the UK.
