The Department for Work and Pensions (DWP) has announced the biggest real-terms increase in Universal Credit in decades. From April 2026, nearly four million households will see their payments rise by an average of £725 per year.
This landmark reform follows the passing of the Universal Credit Act 2025, which introduced permanent adjustments to the welfare system.
The changes go beyond higher payments — they also reshape how Universal Credit supports disabled people, improve work incentives, and strengthen safeguards for the most vulnerable.
Universal Credit Changes
The DWP has confirmed that the new rules represent more than a cash increase. They mark a system-wide restructuring designed to balance fairness, stability, and long-term sustainability.
- Annual Boost: Eligible households will receive up to £725 more each year by 2029/30.
- Standard Allowance Uplift: Base payments for claimants aged 25 and above will permanently rise.
- Balancing Elements: Adjustments will be made between the standard allowance and the health element to encourage employment while still protecting vulnerable groups.
Right to Try Guarantee
A headline feature of the reform is the Right to Try Guarantee.
This change allows people with disabilities or long-term health conditions to try working without risking their benefits or facing an immediate reassessment.
The policy recognises that health conditions can fluctuate. Claimants will now be able to test whether they can manage work, without the fear of losing their safety net. For many, this will mean a smoother path back into employment and greater financial independence.
Severely Disabled Claimants
Around 200,000 people with severe, lifelong conditions will be exempt from repeated reassessments under the new rules. This guarantees stability and dignity for those with the most serious conditions.
Additionally, claimants who are terminally ill (with less than 12 months to live) will remain protected, receiving uninterrupted support.
Both groups will see their Universal Credit health element and standard allowance rise in line with inflation from 2026/27 through 2029/30.
Long-Term Financial Impact
The Institute for Fiscal Studies (IFS) has described this uplift as the largest real-terms boost in out-of-work support since 1980.
For households, this means:
- More predictable income to plan budgets
- Reduced risk of falling into poverty
- Payments that keep pace with inflation, preserving value during high living costs
This approach reflects the government’s goal of ensuring that Universal Credit continues to be a reliable safety net for struggling families.
Employment
The reforms also include a £3.8 billion employment support package aimed at people with disabilities or long-term health issues.
This will expand schemes like Connect to Work and support the new Pathways to Work Guarantee, which offers training, skills development, and health support tailored to individuals.
The goal is not just financial aid, but to create real opportunities for sustainable employment and long-term independence.
Disability Assessments Review
Alongside these financial changes, the DWP has launched a review of the Personal Independence Payment (PIP) assessment process.
The review, led by Disability Minister Sir Stephen Timms, will be co-designed with:
- Disabled people
- Advocacy groups
- Health professionals
- Members of Parliament
The aim is to build a fairer, more transparent system that reflects lived experience. Engagement with the public and advocacy organisations will take place throughout summer 2025.
Concerns
Despite the positive reception, some organisations have raised concerns. Critics warn that halving the health element for new claimants unable to work could leave certain households struggling.
Charities such as Turn2us stress that reforms must ensure no one is left without access to essentials like food, housing, and heating.
Balancing work incentives with fairness remains a key challenge for the government as reforms are rolled out.
FAQs
When will the £725 Universal Credit increase start?
From April 2026 for nearly four million households.
What is the Right to Try Guarantee?
It lets disabled people try work without losing benefits.
Who will be exempt from reassessments?
200,000 claimants with severe lifelong conditions.
Will Universal Credit rise with inflation?
Yes, payments will be inflation-linked until 2029/30.
How much is the DWP investing in job support?
£3.8 billion will fund training and employment schemes.
