Millions of households across the UK are set to receive a significant boost to their incomes next year, following major welfare announcements in last week's Budget. Chancellor Rachel Reeves unveiled a substantial £15 billion package for benefits spending, targeting support for working-age families, disabled people, and pensioners.
Key Increases for Universal Credit and PIP
The Chancellor confirmed that most working-age benefits will rise in line with the September inflation rate of 3.8 per cent from April 2026. This applies to Personal Independence Payment (PIP), child benefit, and other standard allowances.
For the over 3.8 million recipients of PIP, this means a tangible weekly increase. Someone on the highest rate for both daily living and mobility components will see their payment rise from £187.45 to £194.55 per week.
However, Universal Credit claimants will see an even larger rise. Due to the new Universal Credit Act 2025, which mandates the benefit must outpace inflation each year until 2030, they will receive an above-inflation increase of 6.2 per cent.
What the Universal Credit Rise Means for Your Wallet
This enhanced uplift translates to concrete gains for household budgets. According to analysis, the increase will mean an extra £6 per week for single claimants, or an additional £312 over a full year.
In practical terms, the standard allowance for a single claimant aged 25 or over is projected to rise from £92 to £98 weekly. For couples where both partners are 25 or over, the allowance will increase from £145 to £154 per week.
Scrapping the Cap and Pension Boost
In a major policy shift, the Budget also confirmed the two-child benefit cap is being abolished. The change, estimated to cost £3 billion annually, is forecast to lift 400,000 children out of poverty immediately.
Pensioners have not been overlooked. The state pension will rise by the often higher earnings growth figure of 4.8 per cent in April 2026. This is expected to increase the full new state pension by around £550 per year, with a total cost of approximately £7.8 billion to the Treasury.
Together, these measures represent a significant injection of funds into the welfare system, aimed at providing cost-of-living support and reducing child poverty following the fiscal decisions of the 2025 Budget.
