Budget 2025 brings a mix of good news and tough trade‑offs for people on Personal Independence Payment (PIP) and Universal Credit, with inflation‑linked rises, an extra boost for the UC standard allowance, and major structural changes from 2026. Here are the key confirmed changes affecting millions of DWP claimants.
Universal Credit: What’s Changing
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Standard allowance rises above inflation: From April 2026, Universal Credit will increase by the September inflation rate plus an extra 2.3% cash uplift each year until 2030 under the new Universal Credit Act 2025. With inflation at 3.8%, that means a 6.1–6.2% rise in April 2026.
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Example weekly amounts: Forecasts suggest the standard allowance for a single adult over 25 will go from about £92 to roughly £98 a week, and for a couple over 25 from around £145 to about £154 a week.
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Two‑child cap scrapped: From April 2026, the two‑child limit in the UC child element will be removed, allowing families to receive the child element for all children, not just the first two. This is expected to benefit around 560,000 families and could add up to £5,310 a year for some larger households, subject to the overall benefit cap.
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Health element cut for new claims: For new claimants placed in the Limited Capability for Work and Work‑Related Activity group from April 2026, the UC health element will be roughly halved (for example, from about £432 a month to around £217) and then frozen, while existing claimants keep their current level under transitional protection.
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Surplus earnings threshold extended: The £2,500 “surplus earnings” threshold, which can reduce UC when earnings jump between months, will be extended for another year from April 2026 to smooth payments for people with fluctuating pay.
PIP: Rates Going Up With Inflation
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PIP uprated by 3.8%: From April 2026, PIP will rise in line with the September 2025 inflation rate of 3.8%.
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New weekly PIP amounts (approx.):
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Daily living component:
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Standard rate from about £73.90 to £76.70 per week (+£2.80).
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Enhanced rate from about £110.40 to £114.70 per week (+£4.30).
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Mobility component:
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Standard rate from about £29.20 to £30.30 per week (+£1.10).
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Enhanced rate from about £77.05 to £79.90 per week (+£2.85).
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Timms review of PIP: Budget 2025 also confirms an independent “Timms review” of Personal Independence Payment to look at assessments, value for money and fraud, which could lead to further rule changes in later years, though nothing is changing immediately for current awards.
Other Linked DWP Benefit Changes
State pension: The full new state pension will rise by about 4.8% in April 2026 under the triple lock, taking it to roughly £241 per week.
Carer’s Allowance: Will increase by around 3.8% in April 2026, from roughly £83.30 to about £86.47 per week.
Disability Living Allowance (DLA): DLA components will also be uprated by 3.8%, with weekly amounts across care and mobility elements rising by a few pounds each.
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In summary
Budget 2025 gives most UC and PIP claimants a real‑terms boost from 2026, especially through the extra 2.3% rise for the UC standard allowance and the scrapping of the two‑child cap, but new UC health‑element claimants will see significantly lower support unless they fall under the stricter “severe conditions” criteria.
