The Department for Work and Pensions (DWP) has officially confirmed a permanent change in the way Universal Credit payments will be processed, starting on April 30, 2025.
This significant change will reduce the deductions cap for claimants from the previous 25% to 15% of their standard allowance, aiming to provide greater financial relief.
By ensuring claimants retain more of their payments, the DWP hopes to ease the economic pressures faced by many households.
According to Manchester Evening News, this adjustment is part of the government’s broader commitment to supporting Universal Credit claimants and ensuring the welfare system is more equitable and sustainable.
Fair Repayment Rate Adjustment
The reduction in the deductions cap is part of the government’s Fair Repayment Rate initiative, which was introduced by Chancellor Rachel Reeves during the Autumn Budget. This initiative is designed to alleviate some of the financial pressure faced by Universal Credit claimants, particularly those dealing with other debts.
The reduction in the deductions cap will allow claimants to retain an average of £35 more per month, equating to £420 over the 2025/26 financial year. By reducing the percentage taken out for deductions, the government aims to give individuals and families more disposable income to meet their day-to-day needs.
The measure will directly impact the amount claimants receive each month. Previously, deductions could reach up to 25% of a claimant’s standard allowance, but with the reduction to 15%, a significant portion of Universal Credit payments will now be preserved.
This will help recipients stretch their income further, particularly as living costs in the UK remain high.
Universal Credit 2025/26 Monthly Rates
For the 2025/26 financial year, the Universal Credit monthly rates have been adjusted as follows :
- Single claimants :
- Under 25 : £316.98 (up from £311.63)
- 25 or over : £400.14 (up from £393.45)
- Couples :
- Joint claimants both under 25 : £497.55 (up from £489.23)
- Joint claimants, one or both 25 or over : £628.10 (up from £617.60)
These figures reflect the 1.7% increase that Universal Credit and other related benefits received on April 7, 2025.
However, as most benefits are paid in arrears, claimants will not see the full benefit of the uprating until their next assessment period is completed. The increase is part of the regular adjustments to keep pace with inflation and changes in the cost of living.
Child Maintenance Deductions
The government recognizes the critical role that child maintenance payments play in reducing child poverty. As such, it has committed to ensuring that these payments continue to be prioritized under the new rules.
In this context, the DWP will be moving child maintenance deductions higher in the regulated priority order. This adjustment ensures that these essential payments will not be affected by the newly implemented 15% cap on deductions.
To further support this, the DWP has introduced a temporary regulatory adjustment. This adjustment will allow child maintenance deductions to exceed the 15% cap if necessary to ensure that these payments are made without disruption.
This change will remain in place for one year while the DWP gathers evidence on how this policy change impacts claimants, especially regarding their ability to manage other financial obligations.
