Chancellor Rachel Reeves has officially set out the new rates for Universal Credit that will apply from April 2026, confirming a significant above-inflation increase for millions of claimants.
Bumper Rise for Standard Allowance
The headline announcement is a 6.2% rise in the standard allowance, which is set to outpace inflation. This substantial increase is designed to provide a direct cost of living boost to some of the nation's lowest-income households.
For a single claimant aged 25 or over, the monthly standard allowance will increase by almost £25. This change means that many people relying on the benefit will be hundreds of pounds better off over the course of the financial year.
Major Policy Shift: Two-Child Cap Abolished
In a major shift in welfare policy, the Labour government has confirmed it will scrap the controversial two-child limit on benefits. This move will allow parents with three or more children to claim extra support through Universal Credit.
The decision effectively means that larger families on benefits will see a bumper financial year, with some gaining hundreds of pounds in additional annual support. However, the policy has drawn criticism from some quarters, with opponents arguing it represents excessive spending on welfare.
Defenders of the move point out that close to half of all Universal Credit claimants are in work, highlighting that the support often supplements low wages.
Controversial Cut to Health Top-Up
While most claimants will see an increase, the government has also outlined a cut for some new applicants. The additional payment for those with the most severe health conditions, known as the Limited Capability for Work-Related Activity (LCWRA) element, is being reduced by almost half for new claimants.
This specific reduction has proven controversial. Charities like Citizens Advice have begun alerting the public to the mixed picture of changes. "The amount of Universal Credit you get will change," they stated, explaining that payments consist of a standard allowance plus extra amounts based on circumstances.
They added, "You might also be affected... if you get the additional amount because you have a long-term health condition or a disability. The amount is decreasing for most people who aren’t already getting it."
The confirmed rates and rules, set to take effect from April 2026, mark a significant reshaping of the welfare landscape under the new government, offering broad increases for most but introducing targeted cuts elsewhere.
