UK households claiming certain benefits from the government are in line for an income boost up to £3,830 following Labour’s Budget.
Rachel Reeves delivered her first Budget as Chancellor on Wednesday announcing £40 billion a year in extra taxes as Labour attempts to “rebuild Britain”.
Reeves said the measures were necessary to plug the “black hole” in the public finances left by the Tories, with the tax money to be used to improve schools, the NHS, housing and transport.
The tax burden will reach 38.3% of gross domestic product (GDP) in 2027-28 – the highest since 1948 as the UK recovered from the impact of the Second World War.
Plans included hikes to employer’s national insurance contributions, an increase to capital gains tax, and changes to inheritance tax, but the Chancellor insisted the Budget will “restore stability” and “protect working people”.
Following the Budget announcement, the Department for Work and Pensions (DW) detailed how the plans will impact those claiming benefits and state pensions, stating that millions are set to benefit from the reforms to boost work and tackle poverty.
Work and Pensions Secretary, Liz Kendall said: “We promised change, and that is what we will deliver. For too long, millions of people have been denied opportunities to work and build a better life, and too many children are growing up in poverty, harming their life chances and our country’s future.
“This Budget shows the first steps in our plan to drive up opportunity and drive down poverty in every corner of the country. There is still much more to do, but this Budget has shown change has begun.”
The plans mean that people claiming all of the benefits below will see an income boost of £3,830 when the changes take effect from April.
Universal Credit – £570
The DWP has said that 1.2 million of the poorest households in the UK will gain an extra £420 on average per year thanks to a change to Universal Credit. A new Fair Repayment Rate will be introduced which will reduce Universal Credit deductions.
Currently, the government can deduct 25% from a household’s Universal Credit standard allowance, but from April next year this will be cut to 15%, meaning households will gain an average of £420 a year.
A 1.7 percent increase to Universal Credit and other working-age benefits will see families on Universal Credit an average of £12.50 per month better off. It means families will have an income boost of £150 on average over the course of a year.
Carer’s Allowance – £2,340
People with care responsibilities will be able to earn more money without losing government support from next April thanks to a change to Carer’s Allowance.
The earnings threshold for the benefit will be boosted by £45 a week to £196, benefiting more than 60,000 carers by 2029/30. That amounts to £2,340 over the course of a year.
Currently, the DWP will issue £81.90 a week if you care for someone at least 35 hours a week and they get certain benefits, but this is set to rise to the equivalent of 16 hours a week at the national living wage.
Reeves explained: “Carer’s allowance currently provides up to £81.90 per week to those with additional caring responsibilities. Today, I can confirm that we are increasing the weekly earnings limit to the equivalent of 16 hours at the national living wage per week, the largest increase since carer’s allowance was introduced in 1976.
“That means a carer can now earn over £10,000 a year while receiving carer’s allowance, allowing them to increase their hours where they want to and keep more of their money.”
State Pension – £470
Pensioners will get a 4.1 percent increase to the basic and new State Pensions in 2025/26 thanks to Labour’s commitment to the pension triple lock.
It means that those who are on the full rate of the new State Pension will see an increase of more than £470 per year, the DWP has said.
Pension Credit – £450
Pension Credit will also get a 4.1% increase from April in line with the average weekly earnings figure for the year to May to July 2024.
Reeves has confirmed the benefit will rise from £11,400 to £11,850 for a single pensioner – an increase of £450.
