Major changes are on the horizon for Universal Credit next year, which could have a significant impact on millions of recipients. Universal Credit, a benefit program administered by the Department for Work and Pensions (DWP), is currently utilized by over eight million individuals in the UK.
The upcoming modifications include an increase in the standard allowance, which serves as the fundamental payment in Universal Credit before any adjustments or deductions are applied. However, there are also notable reductions slated for the health-related component for new claimants of Universal Credit.
As part of the transition, most of the older legacy benefits are being phased out in favor of Universal Credit, with the final shift expected to be completed by the conclusion of March 2026. Benefits like Tax Credits, Income-based Jobseeker’s Allowance, Income Support, Income-related Employment and Support Allowance, and Housing Benefit will be replaced by Universal Credit.
Individuals required to transition to Universal Credit will receive a “migration notice” through mail, providing a three-month window to initiate their Universal Credit claims. Certain circumstances may allow for the continuation of old benefits, such as the ability to maintain a Housing Benefit while residing in supported or temporary housing.
Effective April of the following year, the Universal Credit standard allowance is set to increase by 6.2%, surpassing the inflation rate. For instance, for individuals aged 25 and above, the standard allowance will elevate from £92 to £98 per week, while for couples, it will rise from £145 to £154 per week. The DWP estimates that by 2029, above-inflation increments will enhance the average standard allowance by £775 in monetary terms.
The Limited Capability for Work and Work-Related Activity (LCWRA) constitutes the health-related aspect of Universal Credit, offering additional monthly payments to individuals with health challenges or disabilities that restrict their work capabilities. Currently set at £97 per week, the LCWRA amount for new claimants will decrease to £50 per week starting April 2026 and remain frozen at this level until 2029/30.
Existing claimants will retain the £97 per week top-up until 2030, with no annual escalations. By 2030, the LCWRA component will be phased out entirely and replaced by a new health element connected to PIP.
A fresh subgroup within the LCWRA, known as the Severe Conditions Category (SCC), will be introduced in April 2026 to cater to individuals with severe, lifelong disabilities and illnesses. Members of the SCC will receive the current higher rate of the LCWRA element and be exempt from routine reassessments for this element, focusing on the impact of their condition rather than the condition itself.