The UK government has announced the most significant changes to Universal Credit in years, with reforms rolling out between 2026 and 2029 that will affect millions of households. If you’re currently receiving Universal Credit or might need it in the future, here’s everything you need to know about what’s changing and how it could impact you.
The Big Picture: What’s Actually Happening
The government is fundamentally rebalancing Universal Credit by increasing the standard allowance above inflation while making substantial changes to the health element (previously known as the Limited Capability for Work-Related Activity component). Think of it as shifting money from one part of the system to another, rather than simply cutting or increasing overall spending.
For the first time ever, the Universal Credit standard allowance will permanently rise above inflation, representing the highest permanent real terms increase to the main rate of out-of-work support since 1980. This means the basic payment everyone receives will grow faster than the cost of living.
Good News: Standard Allowance Getting a Real Boost
If you’re a single person aged 25 or over, your weekly Universal Credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30. That’s an extra £14 per week, or roughly £728 more per year by the end of the period.
Around 3.9 million households who don’t currently receive the health element will gain an average of £265 per year by 2029/30. This particularly helps people who are out of work for reasons other than health conditions, including those seeking employment or caring for family members.
The government describes this as addressing a fundamental problem in the current system, where the basic rate of support had fallen so far behind that it created what officials call “perverse incentives” – situations where people might feel pressured to focus on proving they can’t work rather than exploring what work might be possible for them.
The Complex Reality: Health Element Changes
Here’s where things get more complicated, and the changes will affect different people in different ways depending on their current situation and when they first claimed.
If You Already Receive the Health Element
For the 2.25 million people currently receiving the health element, your payment will be frozen at £97 per week until 2029/30. While this means the health element won’t increase with inflation (effectively making it worth less in real terms over time), you’ll still benefit from the standard allowance increases.
Current recipients are expected to lose about £500 per year on average by 2029/30, but this accounts for both the frozen health element and the increased standard allowance working together.
If You Need to Make a New Claim After April 2026
For new claimants, the health element will be significantly reduced from £97 per week to £50 per week starting in April 2026, and then frozen at that level until 2029/30. This represents a substantial change that could affect your household budget significantly.
Future recipients could face an average loss of £3,000 per year compared to the current system, even accounting for the higher standard allowance.
Important Protections for Severe Conditions
The government has built in crucial protections for people with the most serious health conditions. Those with severe, lifelong health conditions who will never be able to work will see their incomes protected through an additional premium, and existing recipients meeting severe conditions criteria will continue receiving the full rate.
People with the most severe, life-long health conditions will have their incomes protected and will not need to be reassessed in the future. This provides important security for those facing the greatest challenges.
Major Assessment Changes: Goodbye Work Capability Assessment
One of the most significant shifts involves how health conditions are assessed. The controversial Work Capability Assessment will be scrapped, and the PIP assessment will be used instead to determine eligibility for the health element of Universal Credit from 2028/29 onwards.
This means eligibility will be based on the impact of disability on daily living, not on the capacity to work. For many people, this could mean fewer assessments overall, as 1.7 million people who currently go through both the work capability assessment and the PIP assessment will now only undergo one assessment.
However, this change also means that losing PIP could affect your Universal Credit entitlement, creating a stronger link between the two benefits than exists today.
Game-Changing Work Protections: The “Right to Try”
Perhaps the most encouraging change for many people is the introduction of new work protections. The government will introduce legislation to guarantee that trying work will not trigger a reassessment for those claiming Universal Credit, Personal Independence Payments, or New Style Employment and Support Allowance.
According to a DWP survey, over half of people claiming Universal Credit or Employment and Support Allowance said they felt worried that they would not get their benefits back if paid employment didn’t work out. This new “right to try” could remove a major barrier that prevents people from testing their ability to work.
This protection acknowledges that many people want to explore work possibilities but feel trapped by fear of losing essential support if things don’t work out.
Investment in Employment Support
Alongside these payment changes, the government is investing £1 billion to provide guaranteed personalised employment support to help people back to work. This represents a recognition that changing payment amounts alone isn’t enough – people need practical support to overcome barriers to employment.
The approach recognizes that different people face different challenges in finding and maintaining work, whether these are related to health conditions, skills gaps, or other circumstances.
What This Means for Your Household Budget
The financial impact of these changes will vary dramatically depending on your circumstances:
- If you’re not currently receiving the health element: You’re likely to be better off, potentially gaining several hundred pounds per year from the higher standard allowance.
- If you currently receive the health element: Your overall position will depend on the balance between your frozen health payment and increased standard allowance, but most people in this situation will see some reduction in their total payment.
- If you need to claim the health element for the first time after April 2026: You’ll face significantly lower health-related support, though the higher standard allowance will offset some of this reduction.
Timeline: When Changes Take Effect
The changes won’t all happen at once. The standard allowance increases begin in April 2026, while the health element changes start at the same time for new claimants. Assessment changes using PIP criteria won’t fully take effect until 2028/29.
This phased approach gives both claimants and the system time to adjust, but it also means the full impact won’t be felt immediately.
A Different Kind of Safety Net
These changes represent a philosophical shift in how Universal Credit operates. Rather than having two very different payment rates that create stark divisions between those deemed able to work and those deemed unable, the system is moving toward more graduated support that aims to make work feel more achievable and worthwhile.
The government argues this addresses fundamental problems in the current system, but critics worry about the real-world impact on people managing serious health conditions. The true test will be whether the increased employment support and work protections prove effective in helping people find sustainable employment that works with their health needs.
For anyone affected by these changes, staying informed about the specific details as they’re finalized will be crucial for planning your household budget and understanding your options.
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