DWP confirms nine ways Budget will affect people on State Pension or benefits next year

Linda Howard
·5-min read

More than 22 million people across Great Britain are claiming at least one benefit from the Department for Work and Pensions (DWP), which includes 12.7m in receipt of the State Pension. Chancellor Rachel Reeves confirmed during the Autumn Budget last week that State Pensions will rise by 4.1 per cent under the earnings growth measure of the Triple Lock while disability and working age benefits will increase by the September Consumer Price Index (CPI) inflation rate of 1.7 per cent.

This includes Universal Credit, Personal Independence Payment (PIP), Attendance Allowance, Disability Living Allowance (DLA), legacy benefits and statutory payments linked to participation in the labour market, additional elements of the StatePension and Pension Credit elements other than the standard minimum guarantee. DWP confirmed these increases will apply across Great Britain.

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It’s important to be aware that the uprating for devolved benefits such as Adult Disability Payment (ADP), Child Disability Payment, Carer Support Payment and Pension Age Disability Payment will be set by the Scottish Government during the Budget next month.

However, it is anticipated that the uprating north of the border will match Westminster to avoid a two-tier benefits system.

New DWP measures announced in the Budget

A summary of key DWP measures are set out below, more information can be found on GOV.UK.

Get Britain Working White Paper

The DWP said that a funding package of £240 million will open up opportunities to millions of people left behind and denied the opportunity to get into work and get on at work.

The White Paper will develop:

  • A new jobs and careers service to help get more people into work, and get on in their work, by linking jobseekers with employers, with an increased focus on skills and careers

  • Joined-up work, health and skills plans to tackle economic inactivity and boost employment

  • A new Youth Guarantee so that every young person is given the opportunity to earn or learn.

Improving fraud, error and debt detection and prevention

A new package of measures will improve how the DWP detects and prevents fraud and error in the welfare system. The support will be targeted “where it is needed most and taxpayers know every pound is spent wisely”. These changes are expected to save £7.6 billion by 2029/30.

Carer’s Allowance

Those with caring responsibilities will be able to earn more without losing government support, with the Carer’s Allowance earnings threshold boosted by £45 a week from £151 to £196. DWP says this will benefit more than 60,000 carers by 2029/30 and is the biggest ever cash increase in the earnings threshold.

An independent review into Carer’s Allowance overpayments has also been announced, to be led by Liz Sayce OBE.

Household Support Fund

This is available to people in England and Wales, a further £1 billion is being invested to extend the support by a full year, on top of the six months already in place between October 2024 and March 2025. This will also be used to maintain Discretionary Housing Payments in England and Wales.

The Scottish Government will receive additional funding on top of the £41m announced in September under the Barnett Formula.

A new Fair Repayment Rate

This will reduce Universal Credit deductions from 25 per cent to 15 per cent. DWP said this will mean 1.2m of the poorest households will benefit by an average of £420 a year.

State Pension and benefits

The Secretary of State has concluded her annual review of the State Pension and benefit rates, which will see:

  • A 4.1% increase to the Basic and New State Pensions

  • A 1.7% increase to Universal Credit and other working-age and disability benefits, worth an average £12.50 per month for a family on Universal Credit

Pension Credit

DWP said: “To deliver the Chancellor’s commitment to maximise Pension Credit take up, DWP are improving use of established data streams to target new pensioner Housing Benefit customers to ensure they are prompted to claim and receive any Pension Credit to which they are entitled.”

This will be applied across Great Britain.

Working Age Benefits

DWP said that the uprating of working age benefits will result in 5.7m households on Universal Credit gaining £150 on average over the 2025/26 financial year.

State Pension and benefit payment uprating

The DWP also confirmed that increased payment rates and changes to the Pension Credit and Carer’s Allowance earnings thresholds will start from April 7, 2025.

State Pension payments 2025/26

The calculations below are based on the Chancellor's announcement that State Pensions will rise by 4.1 per cent from April 2025. It’s important to be aware that additional State Pension elements will increase by the September CPI figure of 1.7 per cent.

Full New State Pension

  • Weekly payment: £230.25 (from £221..20)

  • Four-weekly payment: £921 (from £884.80)

  • Annual amount: £11,973 (from £11,502)

Full Basic State Pension

  • Weekly payment: £176.45 (from £169.50)

  • Four-weekly payment: £705.80 (from £678)

  • Annual amount: £9,175 (from £8,814)

Disability benefits

An uprating of 1.7 per cent will see people on disability benefits receive between £29.20 and £187.45 each week, some £116.80 or £749.80 every four-week pay period.

It's important to be aware the highest figure of £749.80 is based on someone receiving the highest award for both the daily living and mobility components.

Attendance Allowance does not include a mobility component.

PIP, Adult Disability Payment, Child Disability Payment and DLA

Estimated weekly rates are shown for all benefits, most are paid every four weeks so to calculate your own uplift simply look for your award rate and multiply by four.

Daily living

  • Lower care award (CDP, DLA only): £29.20 (from £28.70)

  • Standard: £73.90 (from £72.65)

  • Enhanced: £110.40 (from £108.55)

Mobility

  • Standard: £29.20 (from £28.70)

  • Enhanced: £77.05 (from £75.75)

Attendance Allowance

  • Lower rate: £73.90 (from £72.65)

  • Higher rate: £110.40 (from £108.55)

Carer's Allowance

  • Weekly payment rate: £83.30 (from £81.90)

  • Four-week pay period: £333.20 £from £327.60)

Universal Credit

  • Single, aged 25 and over: £400.14 (from £393.45)

  • Couples, aged 25 and over: £1,213.72 (from £1,193.44)

The Department for Work and Pensions (DWP) and HM Revenue and Customs (HMRC) will publish a full list of the benefit payments for 2025/26 within the next few weeks.

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