Many UK households have faced relentless financial pressure in recent years from rising utility bills and food costs to housing expenses. For millions, budgeting has become a monthly challenge. But there’s promising news from the Department for Work and Pensions (DWP). A new welfare reform bill progressing through Parliament promises a £725 income boost that could reshape the financial future for nearly four million households.
This permanent increase to Universal Credit (UC) marks the largest real-terms uplift in out-of-work support since 1980. But what does it actually mean for claimants? How will it be rolled out? And who stands to benefit the most?
This blog will walk through all the key details, including eligibility, payment structure, the Right to Try Guarantee, and wider reforms reshaping the UK welfare system.
What Is the DWP £725 Cost of Living Boost?
The DWP £725 cost of living boost refers to a permanent increase in the Universal Credit standard allowance. Unlike one-off payments made during previous years to address immediate inflationary pressures, this is a structural change to the welfare system that will raise the standard monthly Universal Credit payments above inflation, gradually increasing until it reaches £725 more per year by 2029/30 for eligible claimants.
The measure is being introduced through the Universal Credit Bill, which recently passed through the House of Commons and is now under consideration in the House of Lords. Once approved and given Royal Assent, it will become part of UK law.
This reform is not just about increasing payments. It represents a philosophical shift in how the Government supports out-of-work individuals. Rather than focusing heavily on top-up elements based on health conditions, the new system seeks to rebalance incentives, offering better financial security while encouraging more people to engage with employment opportunities.
Why Is the Government Reforming the Welfare System Now?
The Government has stated that the welfare system, in its current form, contains “perverse disincentives to work”. These are structural issues where claimants may feel financially penalised for attempting employment, which leads to long-term benefit dependency rather than supporting a gradual return to the workforce.
The Universal Credit Bill aims to fix this by:
- Raising the base support for all Universal Credit recipients
- Reducing over-reliance on health-based additions
- Introducing legal protections for those who want to try work but fear reassessment
These reforms are also part of a broader strategy set out in the Plan for Change and the Get Britain Working White Paper, which together aim to improve national living standards, expand access to employment, and modernise the support structure for people with complex needs.
How Will the £725 Boost Be Delivered and Over What Timeline?
The delivery of the £725 income boost will not happen all at once. Instead, it will be rolled out through annual above-inflation increases to the Universal Credit standard allowance, starting in 2026/27 and continuing through to 2029/30.
This reform means that, by 2029, a single adult aged 25 or over will receive £725 more each year than they would under current inflation-only uprating mechanisms.
Here’s a simplified overview of the implementation timeline:
| Financial Year | Change in Universal Credit Standard Allowance |
| 2026/27 | Annual increase begins above inflation |
| 2027/28 | Continued uplift based on legislative schedule |
| 2028/29 | Higher increases sustained |
| 2029/30 | Full £725 annual increase reached |
No application will be necessary. Eligible claimants will automatically receive the increased payment as part of their regular UC entitlement.
Who Will Be Eligible for the DWP £725 Income Boost?
Eligibility for the uplift is centred on individuals who are currently receiving Universal Credit or will begin receiving it under the revised structure. This includes both existing claimants and new ones, although there are some conditions to be aware of.
People who meet any of the following conditions are expected to benefit:
- Single adults aged 25 or over receiving the standard UC allowance
- Claimants who fall under the Severe Conditions Criteria, which includes those with lifelong conditions unlikely to improve
- Individuals whose claims fall under the Special Rules for End of Life (SREL)
- Existing recipients of the UC health element who retain entitlement post-reform
However, some groups will not see the full benefit of this boost. For example, those on contribution-based benefits such as ESA or JSA alone are not included in the uplift. Additionally, new claimants who do not meet the qualifying criteria for the health element after April 2026 may receive a lower health top-up.
What Changes Are Being Made to the Health Element in Universal Credit?
One of the central reforms under the new Bill is a rebalancing of the Universal Credit health element and the standard allowance. For many years, the system heavily weighted payments toward claimants with health conditions. While supporting those in need remains a priority, the new structure aims to eliminate the unintended consequence of discouraging people from trying to return to work.
Under the changes:
- The health top-up for new claims will be capped at £50 per week from April 2026
- Existing recipients and those with severe or terminal conditions will continue to receive the higher health element
- All applicable elements, including the health top-up, will be uprated at least in line with inflation from 2026 to 2030
This model ensures protection for the most vulnerable, while reducing long-term benefit dependency for those who may eventually re-engage with employment.
What Is the ‘Right to Try Guarantee’ and Who Will It Support?
The Right to Try Guarantee is one of the most progressive aspects of the new legislation. For the first time, disabled individuals and people with long-term health conditions will be legally protected if they attempt to return to work but are unable to continue due to their health.
This guarantee ensures that:
- Trying work does not trigger an automatic reassessment
- Claimants who cannot sustain work can return to benefits seamlessly
- The law protects people with chronic conditions or recovering from serious illness
This move recognises that recovery is not always linear and encourages people to engage with employment support services without risking their financial stability.
How Are Disabled People and the Terminally Ill Protected?
Safeguarding the dignity of the most vulnerable remains a priority in this reform. Around 200,000 individuals who meet the Severe Conditions Criteria will be exempt from future reassessments under the new system.
Those affected include:
- Individuals living with severe lifelong disabilities
- People with terminal illnesses, under the Special Rules for End of Life
For these claimants, the reform guarantees continued support with no need for repeat assessments, and their payments will increase annually in line with inflation, ensuring long-term financial stability.
What Employment Support Will Be Offered Alongside These Changes?
To ensure that those who can and want to work are properly supported, the Government is investing £3.8 billion across the current Parliament in employment services.
This funding will expand access to:
- Tailored one-on-one employment support
- Health and skills training programmes
- New models like the Pathways to Work Guarantee
The aim is to build on the success of existing initiatives, such as the Connect to Work programme, and extend employment support to a broader range of individuals, including young people and those with fluctuating or hidden health conditions.
These services will be delivered in partnership with local authorities and are aligned with the Government’s ambition to reach an 80% employment rate, ensuring that every person who can work, has the tools and opportunities to do so.
How Will These Welfare Reforms Affect the UK Long-Term?
The reforms outlined in the Universal Credit Bill represent more than just a financial increase. They signal a philosophical rebalancing of the UK’s welfare model.
The combination of increased payments, legal protections, and significant investments in employment support creates a framework designed to:
- Provide dignified, reliable support for those unable to work
- Help more people transition into employment
- Prevent benefit traps and long-term dependency
- Create regional strategies to tackle inactivity via local empowerment
Work and Pensions Secretary Liz Kendall described the reforms as giving people a real chance for a better future, moving away from a static support model to one that is dynamic, inclusive, and forward-looking.
FAQs About the DWP £725 Cost of Living Boost
Is the £725 increase a one-off payment or permanent?
It is a permanent increase to the Universal Credit standard allowance, spread over four years and above inflation.
Will all Universal Credit claimants get this uplift?
Not all. Only those meeting specific eligibility, including existing recipients and those aged 25+, will receive the full increase.
Does the health element change for current claimants?
No, current recipients of the health element are protected and will not see a reduction.
What protections are in place for severely disabled people?
Those meeting the Severe Conditions Criteria will be exempt from reassessments and continue receiving enhanced payments.
How does the Right to Try work in practice?
It allows claimants to try employment without fear of losing benefits, with legal protection if they are unable to continue.
Is there any support for younger claimants?
Yes, though the £725 figure applies to single adults aged 25+, other tailored support is available through youth employment programmes.
How can I stay informed about these changes?
Follow updates on gov.uk, speak to your Jobcentre, and sign up for official DWP notifications to receive verified updates.
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