The government is preparing to increase benefit rates by 1.7% starting in April 2025. Millions of households on benefits such as Universal Credit, housing benefit, and pension credit will receive higher payments to keep pace with rising costs of essentials like food, fuel, and household expenses. The exact increase will depend on individual circumstances.
Universal Credit standard allowances will rise by around £5 to £7 per month, with extra amounts for children, limited capability for work, and carers also seeing slight increases. Housing Benefit rates for pensioners and dependent children will go up by £2 to £4 per week. Personal Independence Payment (PIP) and Employment Support Allowance (ESA) rates will increase by around £1 to £2 per week.
Attendance Allowance, Pension Credit, Disability Living Allowance (DLA), and Carer’s Allowance rates are also set to increase slightly. Child Benefit for the eldest or only child will rise by 42p per week, with additional children getting an extra 29p weekly. Maternity, Paternity, Adoption, and Shared Parental Pay could increase by around £3 per week.
The Chancellor is expected to uphold the triple lock guarantee on state pensions, resulting in a 4.1% pay rise for pensioners. These changes aim to provide better financial support for households coping with the rising cost of living. Detailed benefits and eligibility criteria can be found on the government’s website.
More than one million of the UK’s poorest households will be £420 a year better off on average due to a change in universal credit deductions. The Fair Repayment Rate, set to be announced in the budget, will cap the amount that can be deducted from benefit payments each month to repay short-term loans and debts at 15%, down from the current 25%. This measure will help 1.2 million households, including 700,000 families with children, who currently see a significant portion of their monthly universal credit payments clawed back.
Benefit increases starting April 2025
Single parents could receive up to £39 more per month, while two-parent families could see an increase of up to £62. Benefit deductions are taken automatically for various debts, including DWP benefit advances, historical child tax credit overpayments, rent and council tax arrears, and utility bill debts.
The new cap will allow claimants to repay debts over a longer period, providing relief to low-income families hit hard by the cost of living crisis. Campaigners welcomed the move but expressed disappointment that the government did not introduce a formal minimum protected floor to universal credit. Latest figures show 4.3 million children in relative poverty in 2022-23, with the poorest families up to £700 a year worse off than they were five years ago.
The budget is also expected to include a £500 million boost to social housing and changes to national insurance contributions to raise £20 billion for public services. State pensioners are set for a significant increase in their payments following an expected adjustment to the triple lock. The State Pension is anticipated to rise by 4.1% in accordance with updated national wage growth figures, substantially higher than the 1.7% September inflation rate that will determine increases for other benefits.
The triple lock guarantee ensures the State Pension will rise by the highest of average annual earnings growth, the Consumer Price Index measure of inflation, or a default minimum of 2.5%. Pensioners can expect an uplift of about £475 next April, bringing the full New State Pension to an estimated £11,975. Those on the full New State Pension should see weekly payments rise by £9.10, from £221.20 to £230.30.
Individuals with full entitlement to the pre-2016 Basic State Pension are set for a weekly payment increase of £6.95, from £169.50 to £176.45. This will boost the annual amount of the Basic State Pension from £8,814 to £9,175.40, an uplift of £361.40. However, the sizeable boost may be dulled by Labour’s pledge to ditch the Winter Fuel Payment for all but the poorest retirees.
Additionally, frozen tax thresholds mean pensioners are edging closer to the point at which their State Pension income becomes liable for tax. It’s important to note that 453,000 expat pensioners living in countries where their pension is frozen won’t see the rise.
