DWP confirms Local Housing Allowance rates and benefit cap frozen from April 2025

Local Housing Allowance (LHA) rates will not increase in April 2025 and will instead be frozen, the Department for Work and Pensions confirmed after the Budget. The level of the benefit cap will also be frozen¹. The confirmation followed the Budget, in which the Chancellor set out the wider package of benefit changes¹.

Working-age benefits paid by the DWP and HMRC will rise by 1.7 per cent from April 2025, in line with September's inflation¹. Pension-age benefits will increase by 4.1 per cent, in line with earnings growth under the Triple Lock, and the government said it would maintain the Triple Lock for the duration of this parliament¹. The National Living Wage will rise from £11.44 to £12.21 an hour for those aged 21 or over, an increase of 6.7 per cent¹.

On the freeze, the commentary published alongside the Budget said:

The same commentary said the freeze marks a return to the stop-start uprating policy adopted by the previous government, and that for private renters and households affected by the benefit cap it will mean a decrease in their real income, as inflation and increased rent levels affect their spending without any compensating increase in benefits¹.

Other measures confirmed include a cap on debt repayment deductions from Universal Credit at 15 per cent of the standard allowance, down from the current maximum of 25 per cent¹. The weekly earnings limit for Carer's Allowance will rise from £151 to £196 a week, and will then increase in line with future National Living Wage rises¹. A further £1 billion will be made available to local authorities for the Household Support Fund and Discretionary Housing Payments for 2025/26¹.

The move of Employment and Support Allowance claimants to Universal Credit is to be completed by 2026, earlier than the previously planned 2028¹. The administration of Pension Credit and Housing Benefit will be brought together for new claimants from 2026, two years earlier than previously announced¹. The government said it would not pursue reform of the High Income Child Benefit Charge means test, so the system stays as it is now¹.

Why it matters for households

Private renters who claim help with rent through Housing Benefit or the Universal Credit housing element will see their LHA rates held at current levels from April 2025, while the commentary notes that rent levels and inflation are expected to continue rising¹. Households whose benefits are limited by the cap will see the cap held at its current level over the same period¹. Both groups are affected from April 2025¹.

Working-age benefits rise by 1.7 per cent from April 2025, the same figure as September's inflation, while pension-age benefits rise by 4.1 per cent¹. This follows the pattern set out in the annual increases system, under which rates are usually uprated each April¹.

Carers who claim Carer's Allowance will be able to earn up to £196 a week from April 2025 before the benefit is affected, up from £151¹. Universal Credit claimants with debt deductions will have those deductions capped at 15 per cent of the standard allowance rather than 25 per cent¹. The £1 billion for the Household Support Fund and Discretionary Housing Payments covers 2025/26¹.

What happens next

The changes take effect from April 2025 unless stated otherwise¹. The regulations covering Severe Disability Premium transitional protection will be amended from April 2025, with payments able to be backdated to February 2024¹. The surplus earnings threshold for Universal Credit of £2,500 will be extended for another year until at least April 2026¹. From April 2028, income tax and National Insurance thresholds will once again be uprated in line with inflation¹.