Universal Credit Act raises standard allowance above inflation

The Department for Work and Pensions announced this week that the Universal Credit Act 2025, which received Royal Assent in early September, will raise the Universal Credit standard allowance above inflation from April 2026 and make wider changes to the benefit’s health-related support. The government says the package will boost incomes for millions of households by combining a September inflation uprating of 3.8 percent with an additional statutory increase of 2.3 percent to the standard allowance, producing an overall uplift of about 6.2 percent next year.

Under the new law, the core Universal Credit standard payment will rise each year above inflation until 2029, a move the Institute for Fiscal Studies called the largest permanent real-terms increase to the main rate of out-of-work support since 1980. The DWP has said the reforms are intended to rebalance the relationship between the standard allowance and health-related elements of Universal Credit and to reduce incentives that, it says, can discourage work.

The Act also restructures support for people with health conditions and disabilities. The government will introduce a Right to Try Guarantee enabling people receiving...