The UK’s welfare system is set to undergo significant changes in 2025, affecting millions of Universal Credit (UC) claimants. The adjustments include payment increases, changes in benefit eligibility, and revisions to the assessment process. Some changes aim to provide more financial relief, while others, including benefit cuts, have sparked controversy.

Here’s a detailed breakdown of what to expect and how it may impact claimants.

1. Universal Credit Payment Increases

To keep up with inflation, Universal Credit payments will increase by 1.7% starting in April 2025. For example, a single claimant aged 25 and over will see their standard allowance rise from £393.45 to £400.14 per month.

Additionally, the UK government has confirmed a permanent uplift in UC payments. From April 2026, the standard allowance will increase by £7 per week, moving from £91 to £98, resulting in an annual increase of £775 for claimants by 2029.

For further details on UC rates, visit the Department for Work and Pensions (DWP) website.

2. Phasing Out of Tax Credits and Legacy Benefits

By April 5, 2025, all existing Tax Credits and other legacy benefits (such as Income Support, Jobseeker’s Allowance, and Housing Benefit) will be fully replaced by Universal Credit.

This means that claimants receiving these benefits must transition to Universal Credit or risk losing financial support. The managed migration process requires recipients to apply within three months of receiving their migration notice to avoid a gap in payments.

You can check if you need to move to UC on the GOV.UK website.

3. Reduction in Universal Credit Deductions

Currently, deductions for debts (such as advance payments, rent arrears, and utility bills) can take up 25% of a claimant’s Universal Credit payment.

From April 2025, this deduction cap will drop to 15%, meaning claimants will retain more of their monthly payment. This is aimed at providing more financial stability for those struggling with debt repayments.

4. Increase in Carer’s Allowance Earnings Limit

For those receiving Carer’s Allowance, the government has announced that from April 2025, the earnings threshold will increase from £151 per week to £196 per week.

This means carers can earn more without losing their entitlement to Carer’s Allowance, which is crucial for many who juggle work with caregiving responsibilities.

5. Expansion of the Help to Save Scheme

The Help to Save scheme, which offers a 50% bonus on savings, will be expanded in April 2025. Currently, it is limited to UC claimants earning a certain amount, but the government will remove the earnings threshold, allowing all working Universal Credit claimants to participate.

6. Changes to Work Capability Assessments (WCA)

For those who receive Universal Credit due to illness or disability, the Work Capability Assessment (WCA) process will be revised.

These changes aim to ensure that more people are assessed fairly and accurately. However, some disability groups have raised concerns about potential stricter criteria that could reduce financial support for those unable to work.

7. Migration Notices for Legacy Claimants

All legacy benefit recipients will receive a managed migration notice by December 2025. Claimants will have three months to apply for Universal Credit once they receive this letter.

Failing to apply within this timeframe could lead to benefit payment disruptions.

8. Government U-Turn on Disability Payment Freezes

The government originally planned to freeze certain disability-related benefits. However, following public backlash, these proposals have been withdrawn.

Instead, the government has introduced a “right-to-try guarantee,” allowing individuals with long-term illnesses to attempt working without losing their disability benefits immediately.

9. Controversial Benefit Cuts

Despite payment increases, the government has announced a £5 billion package of benefit cuts in an effort to reduce welfare spending.

These include:

• Freezing and reducing UC payments for new disability claimants
• Raising the standard allowance for other claimants
• Providing more personalized employment support

Critics argue that these cuts could negatively impact up to 1.2 million disabled individuals, potentially reducing their income by £4,200 to £6,300 per year by 2029.

What This Means for Universal Credit Claimants

These changes will have mixed impacts on claimants:

Positive Changes:

• Increased UC standard allowance
• Lower deduction cap (more disposable income)
• Higher Carer’s Allowance earnings limit
• Expanded Help to Save scheme

Negative Changes:

• Stricter disability assessment criteria
• Benefit cuts that may reduce financial support for some groups

With legacy benefits being phased out, it is crucial for claimants to stay informed and act promptly when receiving migration notices.

Conclusion

The 2025 Universal Credit changes represent a shift towards encouraging employment while adjusting financial support. While payment increases and deductions caps offer relief, benefit cuts and changes to disability assessments have raised concerns.

Staying up to date with these policies and acting on migration notices will help claimants avoid disruptions and maximize their entitlements.