Changes to universal credit: what it means for you

If you receive universal credit, there was some good news in the autumn budget and some not-so-good news.  

Here’s what you need to know.  

Lower repayment rate 

Benefit deductions are taken automatically for a range of debts, including department for work and pensions (DWP) benefit advances, child tax credit overpayments, rent and council tax arrears and water and utility bill debts. 

Starting in April 2025, the repayment rate for anyone needing to pay back universal credit payments will drop from 25% to 15% of the standard allowance, allowing claimants to repay debts over a longer period. 

This means that over 1.2 million of the poorest households could see an extra £420 in their pocket on average.  

At Money Wellness, 64% of the people we support with benefit deductions also need access to a food bank. We’ve been lobbying for changes to benefit deductions for some time and think the reduction from 25% to 15% is a positive step for some of the most vulnerable in society.  

But we think the government should go further. Sebrina McCullough, our head of external relations, says:  

“In the longer term, we would like to see the government move towards making decisions based on individual affordability to ensure no one is left without enough money for essentials.” 

Payment increase 

Next year, universal credit and personal independence payments (PIP) will increase by 1.7%, inline with inflation, giving claimants a bit more financial breathing space. 

Crackdown on fraud 

The budget also introduced a new bill to tackle benefits fraud. The plan will let banks to share data with the government to spot possible overpayments to help save around £4.3bn a year. 

What’s still the same? 

While there were positives, the budget didn’t address some important issues. The benefit cap remains in place, which limits how much you can get. This means: 

• If you’re a couple or single parent, you can’t receive more than £2,110.25 per universal credit assessment period, or £486.89 per week 

• If you’re a single person without children, you can’t receive more than £1,413.92 per universal credit assessment period, or £326.26 per week 

Many campaigners are disappointed that the government didn’t lift the cap, as they argue it’s essential for improving the lives of vulnerable households.  

Sector leaders have warned that the budget is a “welcome first step” in improving services for children but “represents a missed chance” to break down barriers for the most disadvantaged families.  

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