DWP Universal Credit major changes for millions in 2026

But, there are winners and losers from the 2026 shake-up, as new claimants who cannot work due to sickness and disability could be thousands of pounds worse off.

It's all part of controversial changes brought in by the Universal Credit Act 2025, which aims to ‘rebalance’ Universal Credit rates by increasing the basic standard allowance that all claimants receive, while cutting the additional payments for most claimants newly found to have disabilities and health conditions that affect their capability for work.

This means:

• Increasing the Universal Credit standard allowance above inflation over the four financial years from 2026/27. By 2029/30, the UC standard allowance will be 4.8% higher than it would have been under the normal practice of increasing the standard allowance in line with Consumer Prices Index (CPI) inflation over the period.
• Reducing the additional amount awarded to help people who are sick or disabled - known as the LCWRA element - by approximately half for most claimants newly entitled to it, from £432.27 a month to £217.26 a month, which will then be frozen in each year to 2029/30.
• Creating a ‘protected’ cohort of existing LCWRA element recipients and new claimants who are terminally ill or have severe, lifelong conditions and are never expected to work. This 'protected' group will see the combined rate of their UC standard allowance and health element increase at least in line with inflation in each year from 2026/27 to 2029/30.

TW
"Peace of mind will...be given to 200,000 individuals in the Severe Conditions Criteria group... as they will not be called for reassessed for Universal Credit (UC) under new legislation."

Right, this is the hill I will die on. These criteria rule out nearly all with MH. 🧵 pic.twitter.com/1YejmAi4Ol

— Dr Jay Watts (@Shrink_at_Large) June 18, 2025

The Department for Work and Pensions (DWP) hopes that ‘rebalancing’ the rates in this way will “remove the incentive for people to declare themselves unable to work in order to improve their incomes” and “would benefit society through increased employment”. It further notes that “work is the best route out of poverty”.

A coalition of charities and campaigners has argued that the changes “will increase hardship among disabled people and their families” , who often “already face disproportionately high levels of hardship”.

The Joseph Rowntree Foundation and New Economics Foundation estimate that the combined impact of these provisions will be around 50,000 more people in poverty by 2029/30. This group is comprised of disabled people and people in disabled households.

These cuts will affect future recipients of the health element of Universal Credit, also known as the Limited Capability for Work and Work-Related Activity (LCWRA) element. Disabled people who receive this payment will have gone through an assessment process and have been found by the DWP to be unable to work or prepare for work.

Examples of the criteria they may have satisfied include:

• Manual dexterity: Cannot press a button or turn the pages of a book with either hand.
• Communication: Cannot convey a simple message, such as the presence of a hazard.
• Learning tasks: Cannot learn how to complete a simple task, such as the setting of an alarm clock.
• Coping with change: Cannot cope with any change, to the extent that day-to-day life cannot be managed.
• Eating: Cannot convey food or drink to one’s mouth without physical assistance from someone else.
• Continence and toilet needs: At least once a week experiences loss of control, leading to extensive evacuation of the bowel or voiding of the bladder.

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Will terminally ill people be protected from Universal Credit changes?

The government has said that some people with a terminal illness or lifelong condition will be protected from this cut.

However, according to the charities who opposed the bill, the impact assessments show that fewer than 10% of new claims are expected to satisfy these criteria.

This would mean 80,000 people seeing their Universal Credit protected by 2030, against a deep cut for 750,000.

What counts as a new claim for Universal Credit?

Most new LCWRA recipients from 6 April 2026 will have significantly lower awards from combined standard allowances and LCWRA elements.

For single claimants aged 25 or over, awards will be around £2,700 a year lower in 2029/30 than for the protected cohort.

Disabled people who move into work for a period of more than six months, are unable to sustain that employment due to the impact of their condition and need to return to claiming Universal Credit as a ‘new claimant’ and so face a £3,000 cut compared to their previous award.

It also includes people who lose their health element following a reassessment and subsequently make a new application for it.

Will the changes save money?

Over the five years of the forecast to 2029/30, the changes are not expected to save money, says the DWP.

However, in the later years of the forecast and in the longer term, reductions to the LCWRA element are expected to result in savings.

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What are the new Universal Credit payent rates from April 2026?

The DWP has now confirmed payments will increase by more than 6% for claimants in April 2026, reflecting September 2025's 3.8% inflation rate, plus the standard allowance increase of 2.3%.

Due to the increase in line with CPI, and the additional uprating factor, in 2026/27 Universal Credit standard allowances will increase as follows:

• From £316.98 to £338.58 per month for single people aged under 25
• From £400.14 to £424.90 per month for single people aged 25 and over
• From £497.55 to £528.34 per month for joint claimants both aged under 25
• From £628.10 to £666.97 per month for joint claimants both aged 25 and over

The Centre for Policy Studies (CPS) says the increases in the standard rate of universal credit will mean someone on out-of-work benefits should be £290 better off in real terms at the end of the decade.