UK Universal Credit Change Now in Effect: Over 1 Million Households to Gain £420 Extra Annually

 

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London, UK — A significant change to Universal Credit comes into force today, delivering a much-needed financial boost to over 1.2 million low-income households across the UK. Under the newly implemented Fair Repayment Rate, the cap on debt deductions from benefit payments has been reduced from 25% to 15%, allowing struggling families to retain more of their income.

This means affected recipients will see an average increase of £420 per year, with 700,000 families with children among those set to benefit the most.

What’s Changing

Previously, Universal Credit claimants could lose up to 25% of their standard allowance each month to repay debts like benefit overpayments, rent arrears, or utility bills. Starting April 30, 2025, that deduction limit is now lowered to 15%, easing the burden on already stretched household budgets.

The policy is designed to strike a better balance between debt repayment and day-to-day financial survival, offering more breathing room to those hardest hit by the ongoing cost-of-living crisis.

When and How the Change Takes Effect

The new 15% cap on deductions applies to all Universal Credit assessment periods starting on or after April 30, 2025. This update is automatic, meaning recipients do not need to take any action to benefit.

Part of a Bigger Plan for Change

This reform is just one element of the government’s wider Plan for Change, aimed at reducing poverty and boosting opportunity across the UK. Other major initiatives include:

• The Get Britain Working White Paper, focused on improving access to quality jobs, revamping Jobcentres, and launching a youth employment guarantee.
• An extended Household Support Fund, with £742 million allocated to local councils for essentials like food, energy, and housing repairs.
• Free breakfast clubs in all primary schools across England, supporting children and working parents alike.

What It Means for Families

The extra £420 per year could help households make real improvements to their quality of life — whether through better nutrition, paying off arrears, or simply gaining some financial peace of mind.

For many, it’s a step toward a fairer, more supportive welfare system — one that doesn’t penalize the most vulnerable for their financial struggles.

As of April 30, 2025, Universal Credit recipients will see lower monthly deductions, giving them more money to manage rising living costs. This reform reflects a shift in policy priorities, putting people and families at the center of welfare support.

Stay informed on Universal Credit updates through gov.uk and trusted financial news sources.

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