The government has confirmed sweeping welfare changes that will bring one of the biggest benefit upratings in recent years. Under Chancellor Rachel Reeves’ Autumn Budget announcement, millions of people on Universal Credit, Personal Independence Payment (PIP), Disability Living Allowance, Attendance Allowance, Carer’s Allowance and other statutory benefits will see their payments rise from April.
The centrepiece of the Budget is the complete abolition of the two-child benefit cap and an above-inflation increase in Universal Credit, implemented alongside a strict crackdown on fraud and a series of tax measures designed to fund the reforms.
Key Takeaways: Major Universal Credit & Benefit Changes Announced in Budget 2026
- Universal Credit to rise by 6.2% from April 2026, combining 3.8% inflation with an extra 2.3% boost under the Universal Credit Act 2025.
- Two-child benefit cap abolished in full, estimated to lift 450,000 children out of poverty by 2029–30.
- Standard UC allowance rising: single claimants from £92 to £98/week, couples from £145 to £154/week, with higher monthly examples also confirmed.
- PIP, DLA, Carer’s Allowance, Attendance Allowance and other statutory benefits increased by 3.8%, the official September inflation rate.
- State pension increasing by 4.8%, continuing the triple-lock link to earnings.
- LCWRA element cut from £432 to £217/month for new claimants, while the standard UC rate gets an above-inflation uplift.
- Motability rules tightened, removing access to “luxury” cars.
- Welfare fraud crackdown aims to recover £1.2bn by 2031.
- Income tax thresholds frozen until 2030, raising £10bn in revenue and pulling more pensioners into tax from 2028.
Full Abolition of the Two-Child Cap Marks a Historic Welfare Shift
The two-child benefit cap, introduced in 2017, prevented UC and tax credit claimants from receiving support for a third or subsequent child born after 6 April 2017. The government has now abolished the cap entirely from April 2026, calling it a policy that “pushed kids into poverty more than any other.”
The Treasury estimates the change will cost £3bn per year once fully implemented and benefit roughly 560,000 families, raising their annual support by an average of £5,310. A Budget example states that a single parent with three children will see payments rise from £20,978 to £24,491.
However, the overall benefit cap — £25,323 per year in London and £22,020 elsewhere — will still restrict total entitlement for some families.
Despite public polling showing 57% support for retaining the cap, the government says its removal forms the largest effort to reduce child poverty in a single Parliament “since records began.”
Universal Credit: April 2026 Brings an Above-Inflation Boost
Universal Credit will see a 6.2% uplift, the highest in years. The increase is made up of:
- 3.8% inflation (September figure), and
- 2.3% additional top-up, mandated by the Universal Credit Act 2025.
Weekly Standard Allowance (Illustrative Figures)
| Claimant Type | Current | April 2026 |
| Single | £92 | £98 |
| Couple | £145 | £154 |
Monthly Standard Allowance (Budget Figures)
| Category | Current | April 2026 |
| Single under 25 | £316.98 | £336.00 |
| Single 25+ | £400.14 | £424.15 |
| Couple under 25 | £497.55 | £527.40 |
| Couple 25+ | £628.10 | £665.79 |
A single adult will receive approximately £6 extra per week — £312 per year — as part of the uplift.
PIP, Disability Benefits, Carer’s Allowance and Attendance Allowance to Rise by 3.8%
The government confirmed that nine inflation-linked benefits will rise by the official September rate of 3.8%. These include:
- PIP
- DLA
- Attendance Allowance
- Incapacity Benefit
- Severe Disablement Allowance
- Industrial Injuries Benefit
- Carer’s Allowance
- Additional State Pension
- Guardian’s Allowance
PIP Increases (Weekly Examples)
- Daily living standard: £73.90 → ~£76.70
- Daily living enhanced: £110.40 → ~£114.70
- Mobility standard: £29.20 → ~£30.30
- Mobility enhanced: £77.05 → ~£79.90
Carer’s Allowance
- £83.30 → ~£86.47/week
Attendance Allowance
- Lower rate: £76.71
- Higher rate: £114.59
LCWRA Payments Slashed for New Claimants
While most benefits increase, the Limited Capability for Work-Related Activity (LCWRA) element of UC will drop from £432 to £217 per month, before being frozen. The government says the change is part of a wider shift to encourage work participation.
State Pension Sees 4.8% Rise Under Triple Lock
The state pension will increase by 4.8% from April 2026:
- Full new state pension: £241.30/week
- Basic state pension: £184.90/week
However, with income tax thresholds frozen, millions of pensioners receiving the full state pension will pay tax for the first time from 2028.
Taxes, Motability Limits and Welfare Funding Pressures
To fund the welfare changes, the government announced:
- Income tax threshold freeze to 2030 (raising £10bn)
- NI increases on salary sacrifice pension schemes
- Higher taxes on property, shares and savings (£2.1bn total)
- £1.4bn tax on electric vehicles
- £1.1bn tax on betting
- Alcohol and tobacco duty increases
- Tourist tax
The Budget also tightens Motability scheme rules, banning luxury cars from being leased using mobility benefits.
A Clearer Picture of Welfare Spending Ahead
According to the OBR, annual welfare spending will rise from £333bn in 2025/26 to £389.4bn by 2029/30, significantly higher than previously predicted. Spending on health and disability benefits will rise from £83.1bn to £103.6bn over the same period.
Where These Welfare Changes Leave the Public
While millions will benefit from higher payments, critics argue that tax freezes and increased charges will hit working people and savers. Supporters say the measures correct deep-rooted inequalities and modernise the welfare system after years of strain.
FAQs on Universal Credit and Benefit Increases Announced in the Budget 2026
1. What changes will Universal Credit see in April 2026?
Universal Credit will rise by 6.2%, combining 3.8% inflation with a 2.3% legislative top-up under the Universal Credit Act 2025.
2. Why is the two-child benefit cap being removed?
The cap is being scrapped to reduce child poverty, with the government estimating 450,000 fewer children in poverty by 2029–30.
3. Which DWP benefits are increasing by 3.8% next April?
PIP, DLA, Carer’s Allowance, Attendance Allowance, Industrial Injuries Benefit, Severe Disablement Allowance, Guardian’s Allowance and Additional State Pension will rise by 3.8%.
4. How much will PIP claimants gain from the 2026 uprating?
PIP rates will rise by 3.8%, increasing weekly daily living and mobility payments, with the highest combined award rising from £187.45 to about £194.55.
5. Will the state pension increase in 2026?
Yes. The state pension will rise by 4.8% under the triple lock, lifting the full new state pension to £241.30 per week.
