The Department for Work and Pensions has officially announced a comprehensive restructuring of Universal Credit payments, set to take effect from the 6th of April 2026. This significant reform introduces a three-tiered system of adjustments designed to reshape the welfare landscape, balancing enhanced support for basic living costs with targeted reductions in specific areas to modify claimant behaviour.
A Three-Pronged Approach to Benefit Adjustment
Central to the announcement is the implementation of three distinct levels of change. The most prominent is an above-inflation increase to the Universal Credit standard allowance, intended to bolster core financial support. Alongside this, various other elements of the benefit will receive a standard rise linked to the Consumer Prices Index. However, in a move that has sparked considerable debate, a third tier involves a substantial reduction in the health-related top-up payment for new applicants, aimed at addressing perceived disincentives to work.
Record Boost to the Standard Allowance
The standard allowance, the foundational payment for all claimants, is set for a notable uplift. The increase of approximately 6.2% combines a 3.8% inflation-linked adjustment with an additional 2.3% boost, described by officials as a 'rebalancing' to better support everyday essentials.
- For single claimants aged 25 or over, the monthly rate will rise from £400.14 to £424.90.
- Single claimants under 25 will see an increase from £316.98 to £338.58 per month.
- Couples on a joint claim will benefit too, with the allowance rising from £497.55 to £528.23 if both are under 25, and from £628.10 to £666.97 if one or both partners are aged 25 or above.
Scrapping the Two-Child Limit and Supporting Families
In a landmark change, the controversial policy limiting support to the first two children in a household is being abolished. Families will now be able to claim the Universal Credit child element for all children. This provides an additional £303.94 per month for each child born after April 2017 who was previously excluded, up from the current rate of £292.81.
Working parents will also gain from increased support for childcare costs. The maximum reimbursable amount rises from £1,031.88 to £1,071.09 for one child, and from £1,768.94 to £1,836.16 for two or more children, ensuring that newly eligible larger families can access necessary nursery or childminder fees.
Major Reduction in Health Top-Up for New Claimants
A highly contentious element of the reform is the sharp cut to the Limited Capability for Work and Work-Related Activity (LCWRA) top-up for new claimants. The monthly payment will fall dramatically from £423.27 to just £217.26. The DWP states this reduction is designed to lessen a "perverse incentive" for individuals to declare themselves unable to work, applying only to those who begin a health-related claim after the April 2026 deadline.
Important protections are in place: Existing claimants already receiving the LCWRA element will be shielded from this cut and will not see their payments decrease in cash terms. In fact, their health top-up will see a slight increase to £429.08. Furthermore, new claimants who are terminally ill or meet the Severe Conditions Criteria will be exempt from the reduction and will qualify for the higher protected amount.
Support for Carers and Work Allowances
The reforms also extend support to carers and adjust work allowances. The Universal Credit carer element, which is separate from Carer's Allowance, will be uprated by 3.8% in line with CPI, increasing from £201.68 to £209.34 per month to aid those looking after vulnerable individuals.
Additionally, work allowances—the amount a claimant can earn before their Universal Credit payment is reduced—will see an increase. The allowance rises from £684 to £710 per month for those with no housing costs, and from £411 to £427 for those whose claim includes help with housing costs.
These sweeping changes, confirmed by the DWP, represent one of the most significant overhauls of the Universal Credit system since its inception, with the dual aims of increasing basic support while reforming specific elements to encourage workforce participation.
