UK households are set to receive a financial boost this year to help with the cost of living. With inflation slightly rising back to 2.2 per cent, additional financial support will be beneficial in managing the ongoing income squeeze, especially following the recent cut in interest rates to 5 per cent at the start of August.

This extra support for households is due to changes implemented by the Department for Work and Pensions. It has applied a 6.7 per cent increase to all benefits, including the State Pension, from April 8, the first day of the first working week of the new financial year (which runs from April 6 to 5).The increase aligns with the Consumer Price Index measure of inflation in the previous September, which is the timeframe used to decide benefit uprating the following April. For the low-income benefit Universal Credit, the increase will result in an average monthly boost to people’s payments of £39, equating to around £470 over this current financial year.

Meanwhile, for the State Pension, the Government implemented an increase of 8.5 per cent. This is based on the triple lock which means annual rises in the pension are in line with the highest figure of September inflation, May-July wage growth or a default minimum of 2.5 per cent

In this case, high pay growth was the predominant factor, reports Birmingham Live.

The New State Pension has seen an increase from £203.85 to £221.20, and the old Basic State Pension has risen from £156.20 to £169.50. The Government has calculated that the average pension boost received over the year is £310. When added to the £470 for Universal Credit recipients, this totals £780.

The average payment to households on Universal Credit varies by family type. Single people with children receive the highest amount with an average monthly payment of £1,210, followed by couples with children who receive slightly less at £1,200 on average.

Childless couples typically receive around £880 while single claimants with no children generally receive approximately £700. All the new payment amounts for the current financial year are detailed below.

Universal Credit payment rates 2024-2025

• Single and under 25: £311.68
• Single and aged 25 or over: £393.45
• Couple both under 25: £489.23
• Couple with one or both 25 or over: £617.60

Child Payments

• For a first child (born before April 6, 2017): £333.33
• For a first child (born on or after April 6, 2017): £287.92
• For a second child: £287.92
• For a subsequent child if an exception or transitional provision applies: £287.92

Disabled Child Payments

• Lower rate addition: £156.11 (if the child receives DLA at middle or lower rate care, DLA mobility at any rate, PIP daily living at standard rate or PIP mobility at any rate)
• Higher rate addition: £487.58 (if the child receives the higher rate care component of DLA, enhanced daily living PIP, or is blind and has a valid Certificate of Visual Impairment – regardless of receiving DLA)

The Universal Credit disabled child addition is included in your claim for every child or qualifying young person on your claim who is in receipt of Disability Living Allowance or Personal Independence Payment or is registered blind. It is included even for children who don’t receive a child element due to the two-child cap.

This element does not replace any other source of help, if they receive DLA or PIP then this will continue to be paid as normal.

Limited Work Capability Payments (for being unfit for work through sickness/disability – these are awarded after a work capability assessment).

• Limited Capability for Work: £156.11 – only payable for claims before April 2017
• Limited Capability for Work and Work-Related Activity: £416.19

Carer’s Element – separate from Carer’s Allowance, find out more here.

• £198.31

Childcare Costs (maximum amount working parents can claim back)

• Maximum for one child: £1014.63
• Maximum for two or more children: £1739.37

Work Allowances (for one or more dependent children or limited capability for work)

This is the amount you can earn before a 55 per cent deduction called the Universal Credit taper rate is applied. It means that for every £1 you or your partner earn in wages over your work allowance, your Universal Credit entitlement will be reduced by 55p.

• Higher work allowance (no housing amount): £673
• Lower work allowance: £404

Transitional Payments (top-ups when making a managed migration from legacy benefits where you received a higher amount).

• transitional Severe Disability Premium (SDP) element (if LCWRA element included): £140.97
• transitional SDP element (if LCWRA element not included): £334.81
• transitional SDP element (joint claimants & higher SDP rate payable): £475.79
• transitional SDP element additional amount for Enhanced Disability Premium (EDP) – single: £89.63
• transitional SDP element additional amount for EDP – couple: £128.04
• transitional SDP element additional amount for Disability Premium (DP) – single: £183.52
• transitional SDP element additional amount for DP – couple: £262.48
• transitional SDP element additional amount for disabled children: £188.86

Housing Costs

Universal Credit includes a built-in housing element to replace Housing Benefit. The amount paid towards your rent is based on the Local Housing Allowance for your area and these LHA amounts can be found here.

The DWP will pay the full rent if it is up to the value of the LHA entitlement. The maximum you can get is the LHA so if your rent is higher, you will need to makeup the difference – a Discretionary Housing Payment from the council may be available to do that.

You can choose to have your Universal Credit housing element paid directly to the landlord or you can pay it yourself.

If you reside in supported or sheltered housing and are not receiving care, support or supervision, you can apply for Universal Credit to assist with housing costs. However, if you’re living in supported or sheltered housing (like a hostel) that provides care, support or supervision; in temporary accommodation arranged by your council due to homelessness; or in a refuge for survivors of domestic abuse, you cannot claim Universal Credit for housing costs.

In these situations, you must apply for Housing Benefit from the council.

What is the current inflation rate?

The Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI), which measures overall UK inflation, increased to 2.2 per cent in July, up from 2 per cent in June. This indicates that prices are rising more quickly nationwide than in previous months, but still at a slower pace than in 2022 and 2023 when households and businesses were under pressure during the height of the cost crisis.

Lalitha Try, an economist at the Resolution Foundation, remarked: “The first rise in inflation in seven months may sound like bad news, but in fact the small size of the increase and the sharp fall in services inflation that lies behind it is good news for both consumers and policymakers. The price of domestic services such as restaurants and leisure activities have replaced food and energy bills as the focus of price pressures for now at least. Keeping a lid on these price rises will hold the key to keeping overall inflation close to target, and getting interest rates down.”

 

 

 

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