UK households claiming Universal Credit are set to be hundreds of pounds better off from next April following two key changes in the Budget.
Chancellor Rachel Reeves confirmed a 1.7 percent increase to Universal Credit and other working-age benefits from April next year.
The government said this will be worth an average of £12.50 extra per month for a family on benefits, providing an income boost of up to £150 over the course of a year.
In addition, it was confirmed in the autumn Budget that a new Fair Repayment Rate will be introduced which will reduce Universal Credit deductions.
This change means that 1.2 million of the UK’s poorest households will gain an extra £420 on average per year.
Under current rules, the government can deduct 25% from a household’s Universal Credit standard allowance, but from April 2025 this will be cut to 15%, meaning households will gain up to £420 annually.
Universal Credit monthly debt reductions refers to when claimants owe money in council tax arrears or unpaid social housing rent. This debt is then deducted directly from Universal Credit payments in some circumstances, leaving claimants less to live on while it is paid back.
Announcing the change in the Commons, Reeves said: “Having heard representations from the Joseph Rowntree Foundation, Trussell and others, to reduce the level of debt repayments that can be taken from a household’s Universal Credit payment each month by reducing it from 25% to 15% of their standard allowance.
“This means that 1.2 million of the poorest households will keep more of their award each month, lifting children out of poverty and those who benefit will gain an average of £420 a year.”
You may be eligible to claim Universal Credit if you’re on a low income or need help with your living costs. To claim you must live in the UK, be aged 18 or over (there are some exceptions if you’re 16 to 17), be under State Pension age, and have £16,000 or less in money, savings and investments.
If you qualify you’ll get one monthly standard allowance for your household. You can apply for the benefit online via GOV.UK, or by phone through the Universal Credit helpline on 0800 328 5644.
