Universal Credit and benefits could rise by up to £253 a year – how much better off will you be?

MILLIONS of households on benefits could see their support rise next year.

Payments usually rise every April in order to keep up with the cost of things such as food, fuel or household bills.

This is known as "uprating" and payments usually increase in line with the previous September’s inflation figure.

Inflation is a measure of how much the prices of everyday goods such as food and clothes, and services such as train tickets and haircuts, have increased compared to a year earlier.

Today, the Office for National Statistics (ONS) published its reading for September, with the figure coming in at 1.7%.

It marks the first time that inflation has fallen below the Bank of England's 2% target in three years.

However, the lower rate means the boost to Univeral Credit could be significantly less than what was seen in previous years.

This year the majority of benefits increased by 6.7% although a few rose by as much as 8.5%.

Meanwhile, in 2023 inflation-linked benefits and tax credits were hiked by 10.1%.

The Department for Work and Pensions (DWP) will confirm the figure for April 2025 just before the end of the year.

However, the Joseph Rowntree Foundation, which works on tackling poverty, said a 1.7% increase would mean the standard allowance basic rate of Universal Credit would rise by around £1.50 a week from its current level of £90.55.

Meanwhile, the basic rate for couples would go up by around £2.50 a week from the current level of £145.13 a week.

The group said the changes will mean a typical low-income family with two children would see its annual UC award rise by £253 next April.

Iain Porter from the Joesph Rowntree Foundation said the increase would "barely touch the sides" for many struggling families.

He explained: "The consequence of today’s rate of inflation is that April’s uprating will be worth just a few pounds to most people.

“The reality is millions of families can’t afford enough food this week, or to turn the heating on as the nights get colder – emphasised by the fact that food price inflation has risen for the first time since early last year.

The following benefits are also legally required to increase each April in line with the previous September’s rate of inflation: 

• Personal independence payment (PIP)
• Disability living allowance
• Attendance allowance
• Incapacity benefit
• Severe disablement allowance
• Industrial injuries benefit
• Carer's allowance
• Additional state pension
• Guardian's allowance

This could mean that those who currently receive the lower rate of Attendance Allowance could see their weekly payment rise by £1.23 to £73.85.

Those on the higher rate of £108.55 will see their weekly allowance rise by £1.85.

In comparison, those on Carers Allowance could see their weekly payment rise by £1.39 to £83.29.

Sarah Coles, head of personal finance, at Hargreaves Landsdown, said it’s still going to be a huge challenge for families to "make ends meet".

She explained: "Fundamentally, prices are still rising, and given how tight money is for those on the lowest incomes, it’s still going to be a huge challenge to make ends meet, especially now that energy prices have risen again."

State pension to rise

Today's inflation figures also further suggest that the state pension is now expected to rise from £11,502.40 to £11,975 per year - a £473 boost.

That's because of the triple lock system, which sees the state pension rise in line with whatever is highest out of: wages for May to July, 2.5% or September's inflation figures.

Revised statistics released on Tuesday revealed that growth in employees' average total pay was 4.1% in the three months to July - not 4%.

The inflation figures published this morning do not outpace this.

Lindsay James, investment strategist at Quilter Investors, said the rise to the state pension would be a "welcome relief" given the loss of the £300 winter fuel payment but it may not be enough.

Chancellor Rachel Reeves made cuts to the benefit earlier this year, meaning 10million not on means-tested benefits would miss out.

She explained: "While it will provide some respite, it will not prevent hundreds of thousands being negatively impacted given those losses at a time when energy bills are on the up again."