Working-age benefits to rise 1.7% and pension-age benefits 4.1% from April 2025

Working-age benefits paid by the Department for Work and Pensions and HM Revenue and Customs will rise by 1.7% from April 2025, in line with September's inflation, while pension-age benefits will rise by 4.1%, in line with earnings growth under the Triple Lock¹. The government also said it would maintain the Triple Lock for the duration of this parliament¹. The Budget took place on 30 October 2024¹.

The uprating applies to benefits across the working-age and pension-age systems. The Triple Lock sets the pension-age increase, and the wider relationship between inflation and annual uprating is set out in how inflation sets increases to benefits, State Pension and tax thresholds¹.

Two housing-related elements are frozen rather than uprated. Following the Budget, the DWP confirmed that Local Housing Allowance rates will not increase in April and will be frozen again, as will the level of the benefit cap¹. For private renters and households affected by the benefit cap, entitledto.co.uk said this means a decrease in real income as inflation and increased rent levels affect spending without a compensating increase in benefits¹. The rules on help with rent cover Housing Benefit, the Universal Credit housing element and Local Housing Allowance.

Other measures confirmed in the Budget include:

The Budget also confirmed that the move of Employment and Support Allowance claimants to Universal Credit will be completed by 2026, instead of 2028 as previously planned¹. A planned reform of the High Income Child Benefit Charge, which would have moved the means test to a household basis, will not go ahead and the system stays as it is now; the charge will be payable through tax codes, and self-assessment returns will be pre-populated with Child Benefit data from next year¹. The administration of Pension Credit and Housing Benefit will be brought together for new claimants from 2026, two years earlier than previously announced¹. A further £1 billion will be made available to local authorities for the Household Support Fund and Discretionary Housing Payments for 2025/26¹.

Why it matters for households

The 1.7% working-age uprating is lower than the 4.1% applied to pension-age benefits, so the two groups see different increases from April 2025¹. Because Local Housing Allowance and the benefit cap are frozen, entitledto.co.uk said private renters and households affected by the cap face a fall in real income as rents and prices rise¹. The Carer's Allowance earnings limit rises from £151 to £196 a week, and the government said the limit will then increase in line with future National Living Wage rises¹. Deductions for debt repayments from Universal Credit will be capped at 15% of the standard allowance instead of the current 25% maximum¹. The National Living Wage rises from £11.44 to £12.21 an hour for those aged 21 and over, the National Minimum Wage from £8.60 to £10.00 for 18 to 20-year-olds and from £6.40 to £7.55 for apprentices¹. Income tax and National Insurance thresholds remain frozen, with uprating in line with inflation from April 2028; Married Couples Allowance and Blind Persons Allowance are exceptions and will be uprated by 1.7% next year¹.

What happens next

The government said it is taking steps to increase Pension Credit take-up, contacting 120,000 pensioners in receipt of Housing Benefit to invite them to claim, and the DWP is recruiting around 700 additional staff to work on Pension Credit claims, with a three-fold increase in claims since the Winter Fuel Payment announcement¹. There were no planned changes to Winter Fuel Payment eligibility¹. Claimants are encouraged to claim Pension Credit before the 21 December deadline that allows successful applicants to also receive this year's Winter Fuel Payment¹. Tax Credit claimants who have appointees started receiving migration notice letters from October 2024¹. Severe Disability Premium transitional protection regulations will be amended from April 2025, with payments possible back to February 2024¹.