Universal Credit claimants may see some financial improvements this spring, despite a lower-than-expected benefits increase. The Department for Work and Pensions (DWP) is implementing several changes that could positively impact people on Universal Credit, particularly those with deductions, parents, and individuals with disabilities.
If you receive Universal Credit, here’s a breakdown of what’s changing and how it might affect you.
Universal Credit Increase in April 2025
Universal Credit saw a 6.7% increase in April 2024, but the rise in April 2025 will be lower. Benefits will increase by 1.7%, as announced by Chancellor Rachel Reeves, based on last year’s inflation rate.
While this increase is relatively small, some claimants will receive additional financial support through new government policies.
Reduction in Universal Credit Deductions
One of the biggest changes from April 2025 will be a reduction in deductions from Universal Credit payments.
- Currently, up to 25% of a claimant’s Universal Credit allowance can be deducted to repay debts.
- From April, this cap will drop to 15%, allowing claimants to keep more of their monthly payments.
- This change will particularly help those who have deductions for rent arrears, advance payments, or benefit overpayments.
Expanded Free Childcare Hours for Parents on Universal Credit
Starting in September 2025, parents on Universal Credit will benefit from additional free childcare hours.
- The government plans to increase the number of free hours available, helping parents manage childcare costs while working or looking for jobs.
- Additional financial support will also be provided to help with childcare-related expenses.
These changes aim to support parents by making it easier to work while receiving Universal Credit.
Changes for Claimants with Disabilities
The government is making significant changes to disability-related benefits to encourage more people into the workforce.
Key Changes:
- The Limited Capability for Work and Work-Related Activity (LCWRA) elements will be abolished.
- A new Health Element will be introduced to replace the LCWRA.
- A revised Work Capability Assessment (WCA) will determine eligibility for disability-related benefits.
- Existing LCWRA claimants will be offered a Chance to Work Guarantee, encouraging employment while maintaining financial support.
These updates aim to provide better financial assistance while promoting employment for individuals with disabilities.
Higher Payments for Disabled Children
Families with disabled children will see a small increase in their financial support:
- Higher disability rate for children receiving Disability Living Allowance (DLA) or Personal Independence Payment (PIP) will increase from £487.58 to £495.87 per month.
- Lower disability rate will increase from £156.11 to £158.76 per month.
These increases are designed to provide additional help to families caring for disabled children.
Controversy Over the Two-Child Limit
One of the most controversial aspects of Labour’s Universal Credit reforms is the decision to continue the two-child limit.
- This policy restricts Universal Credit payments for families with more than two children.
- However, families currently receiving benefits or tax credits for more than two children will continue to receive payments for additional children as long as their circumstances remain the same.
Further details on these policies can be found on the Gov.uk website.
Universal Credit claimants will experience several changes in 2025, including a lower benefit increase, reduced deductions, more childcare support, and disability benefit reforms. While these changes aim to provide additional financial help, some policies—such as the two-child limit—remain unchanged, causing concern for larger families.
If you are affected by these updates, it’s important to check your eligibility for additional support and stay informed about upcoming changes. Visit Gov.uk for more details on how these reforms impact your benefits.
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FAQ
How much will Universal Credit increase in 2025?
Universal Credit will increase by 1.7% in April 2025, based on last year’s inflation rate. This is lower than the 6.7% increase in 2024.
What is changing with Universal Credit deductions?
From April 2025, the maximum deduction from Universal Credit payments will be reduced from 25% to 15%, allowing claimants to retain more of their benefits.
Will parents on Universal Credit get more childcare support?
Yes, starting in September 2025, parents on Universal Credit will receive additional free childcare hours and extra financial support for childcare costs.
What changes are being made to disability benefits?
The Limited Capability for Work and Work-Related Activity elements will be removed, replaced by a new Health Element and a revised Work Capability Assessment.
How much are disability payments increasing for children?
The higher disability rate for children on DLA or PIP will increase from £487.58 to £495.87 per month, while the lower rate will rise from £156.11 to £158.76.
Is the two-child limit still in place for Universal Credit?
Yes, the two-child limit will continue. However, families on existing benefits with more than two children will keep receiving payments for all children as long as their circumstances remain unchanged.
