Universal Credit Act 2025: What You Need to Know

The Universal Credit Act 2025, a significant legislative update, has been enacted to adjust the financial support provided to individuals receiving Universal Credit and related benefits in the UK. Here's a breakdown of what this means for claimants over the next few years.

Key Changes to Universal Credit

1. Standard Allowance Adjustments (2026-2030):

   • From the tax year 2026-27 to 2029-30, the standard allowance for Universal Credit will be subject to annual increases based on the Consumer Prices Index (CPI) and a specific uplift percentage. This ensures the allowance keeps pace with inflation and economic conditions.
   • Uplift percentages are set as follows: 2.3% for 2026-27, 3.1% for 2027-28, 4.0% for 2028-29, and 4.8% for 2029-30.

2. Limited Capability for Work and Work-Related Activity (LCWRA) Element:

   • A new LCWRA amount of £217.26 is introduced for claimants who are not classified as pre-2026 claimants, severe conditions criteria claimants, or terminally ill.
   • The LCWRA and Limited Capability for Work (LCW) elements will not be subject to annual benefit uprating from 2026 to 2030, effectively freezing these amounts.

3. Protected LCWRA Amount:

   • For those who were receiving the LCWRA element before April 6, 2026, and continue to meet specific criteria, the protected amount will be adjusted to ensure it does not fall below the inflation-adjusted value from the previous year.

4. Legacy Employment and Support Allowance (ESA):

   • Similar adjustments apply to ESA, ensuring that personal allowances and related components do not decrease in real terms due to inflation. Certain ESA components will not be subject to annual uprating from 2026 to 2030.

5. Provisions for Northern Ireland:

   • The Act includes corresponding provisions for Northern Ireland, ensuring that changes to the Universal Credit and ESA systems mirror those made in the rest of the UK. This includes similar adjustments to the standard allowance and LCWRA elements.

What This Means for Claimants

• Financial Security: The Act aims to provide greater financial security and predictability for Universal Credit recipients by ensuring that their benefits increase in line with inflation and specific economic conditions.
• Specific Support for Vulnerable Groups: By setting protected amounts and specific criteria for severe conditions, the Act targets additional support for the most vulnerable claimants.
• Legislative Consistency Across the UK: By including Northern Ireland in its provisions, the Act ensures uniformity in benefit adjustments across the UK, simplifying the system and providing a consistent approach for all claimants.

This legislative update is part of the government's ongoing efforts to adapt social welfare policies to the economic realities and ensure that support systems are fair, adequate, and responsive to the needs of those relying on them.