The Department for Work and Pensions (DWP) has announced a significant change to Universal Credit (UC) that will see an additional £250 boost for claimants. For the first time, the Universal Credit standard allowance is set to rise permanently above the rate of inflation, reaching an estimated £725 increase by the 2029/30 financial year for a single person aged 25 or over.
This increase marks the most substantial real-terms rise to the core out-of-work support since 1980, according to the Institute for Fiscal Studies (IFS). The reforms, outlined in the Universal Credit Bill, aim to rebalance the relationship between the UC standard allowance and the health-related top-up payments, addressing existing imbalances that have inadvertently encouraged long-term dependency.
Under the new legislation, the standard allowance will increase above inflation annually for the next four years. Meanwhile, the health top-up for new claims will be reduced to £50 per week starting in April 2026. However, current recipients who meet the Severe Conditions Criteria or are assessed under the Special Rules for End of Life (SREL) will continue to receive the higher health payment. Those with severe, lifelong conditions will also be exempt from reassessments.
The DWP highlighted that while the boost benefits the standard allowance, most new claimants eligible for the Limited Capability for Work and Work-Related Activity (LCWRA) element after April 2026 will face lower combined payments than the protected cohort, potentially resulting in awards approximately £2,700 less per year by 2029/30 for single claimants aged 25 or over.
These changes reflect a broader effort to create a more balanced and sustainable Universal Credit system, supporting claimants while encouraging independence.