The Universal Credit Act 2025 received Royal Assent on 3 September 2025, according to the Department for Communities in Northern Ireland1. The Act, chapter 22 of 2025, makes provision to alter the rates of the standard allowance, the limited capability for work element and the limited capability for work and work-related activity element of Universal Credit, and the rates of income-related Employment and Support Allowance2.
The Act sets formulae for the tax years 2026-27 to 2029-30. The standard allowance is calculated by taking the previous year's amounts, increasing them by the relevant CPI percentage, then increasing the result by a fixed uplift percentage3. The uplift percentages are 2.3% for 2026-27, 3.1% for 2027-28, 4.0% for 2028-29 and 4.8% for 2029-303. The Department for Communities said the UC standard allowance has been increased by the CPI rate of 3.8% and then a further 2.3% for 2026/27, an increase estimated to be worth £760 annually to a single parent aged 25 or over, or £1,195 for a couple where one is aged 25 or over with children by 2029/301.
The Act introduces a lower rate of the LCWRA element from 6 April 2026 for claimants other than a pre-2026 claimant, a Severe Conditions Criteria claimant or a claimant who is terminally ill, set at £217.263. That lower rate will be frozen from 2026/27 to 2029/301. The higher, protected rate applies only to those three categories1. The Department for Communities said the protected rate of LCWRA has been uprated by 1.54% on average1. The Act defines a pre-2026 claimant as someone entitled at any time before 6 April 2026 to an award of universal credit that included the LCWRA element, and entitled to such an award continuously from that time3.
The Act also makes equivalent changes to income-related ESA, described by the Department for Communities as a precautionary measure to account for the possibility that not all ESA IR cases will be moved onto UC by April 20261. Section 1 applies to ESA IR personal allowance amounts for 2026-27 to 2029-30 as it applies to the standard allowance3. Annual uprating does not apply, in the tax years ending 5 April 2026 to 5 April 2029, to any amount of an ESA IR disability premium, the ESA IR support component or the ESA IR work-related activity component3.
The Northern Ireland Statutory Rule setting rates under the Act's formulae comes into operation on 6 April 20261. It gives the UC standard allowance as £338.58 for a single claimant aged under 25, £424.90 for a single claimant aged 25 or over, £528.34 for joint claimants both aged under 25, and £666.97 for joint claimants where either is aged 25 or over1. It substitutes £429.80 for £423.27 in the row showing the LCWRA element that applies to a pre-2026 claimant, severe conditions criteria claimant or claimant who is terminally ill1. The Department for Communities said the proposals are expected to increase its Annually Managed Expenditure in 2026-27 by approximately £7m, met in full by HM Treasury1.
"The Act also introduces a lower rate of LCWRA element from 6 April 2026 for claimants other than a pre-2026 claimant, a Severe Conditions Criteria (SCC) claimant or a claimant who is terminally ill, which will be frozen from 2026/27 to 2029/30."
Why it matters for households
The Act changes how Universal Credit and income-related ESA rates are set for four tax years, and creates two rates of the LCWRA element, also known as the UC health element. Claimants who were entitled to the LCWRA element before 6 April 2026 and continuously thereafter, plus Severe Conditions Criteria claimants and terminally ill claimants, keep the higher protected rate1. New claimants outside those categories from 6 April 2026 receive the lower rate of £217.26, which is frozen through 2029/301. The Department for Communities said the approach ensures existing claimants, many of whom have long-term or severe health conditions, are not disadvantaged by the rebalancing of support within UC, and that their total entitlement keeps pace with rising living costs1. The standard allowance rises by CPI plus 2.3% for 2026/271. For people on income-related ESA, personal allowances are uprated under the same formula, and the Rule legally separates ESA IR personal allowance rates from ESA Contributory rates, so ESA IR is uprated through this Statutory Rule while ESA Contributory, including New Style ESA, continues to be uprated through the annual Up-rating Order1.
What happens next
The Northern Ireland Statutory Rule must be made and laid no later than 13 March 2026 to come into operation on 6 April 2026, aligning with the equivalent Department for Work and Pensions instrument, which was laid on 9 February 2026 and comes into force on 6 April 20261. The Act's LCWRA provisions come into force on 6 April 2026 and have effect in relation to assessment periods commencing on or after that date3.
Sources3 cited
- draft-sl1---uc-and-esa-rates-of-allowances-amendments-and-modifications-regulations-northern-ireland-2026.pdf niassembly.gov.uk
- Universal Credit Act 2025 legislation.gov.uk
- Universal Credit Act legislation.gov.uk
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