Three benefits that WON’T rise next year and it could hit your Universal Credit payment

THREE major benefits that many households rely on will not see an increase next year, and this will significantly affect Universal Credit payments. 

This decision comes even as most Universal Credit allowances are set to increase by 1.7% in April 2025.

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Next spring, the standard allowance for those single and aged 25 or over will rise from £393.45 to £400.14 a month.

Extra amounts for children and those with a limited capability for work will also see an increase.

However, three critical components that can significantly affect the amount of Universal Credit you receive will not rise.

Frozen benefit caps, capital limits and local housing allowance (LHA) rates will affect thousands of claimants.

These components are crucial in determining the amount of financial support individuals and families receive, and the freeze means that many will continue to struggle with rising living costs without additional help.

Below, we’ve listed precisely how each component will be frozen.

Plus, we’ve explained how it’ll affect your entitlement to benefits.

1. Benefit cap

First brought in by the government in 2013, the benefit cap sets a limit on the total amount of benefits households can get.

Universal Credit counts towards the cap, along with other benefits like child benefit, housing benefit and jobseekers allowance.

And if your income is above this limit, your housing benefit or Universal Credit might be reduced.

In Greater London, for couples (with or without children) or single people with a child of qualifying age, the cap is £25,323 a year.

For single adult households without children, it’s £16,967.

Outside of London, the limits are £22,020 and £14,753, respectively.

You won’t be affected by the benefit cap if you or your partner:

• Are claiming working tax credit, even if you have a nil award
• Are over Pension Credit age.
• Get Universal Credit because of a disability or health condition that stops you from working. Or because you care for someone with a disability.

You can use the Turn2Us benefits calculator to check whether you are affected affected by the benefit cap by visiting benefits-calculator.turn2us.org.uk.

2. Capital limits and surplus earnings

Capital limits restrict the amount of savings you can have before you stop getting certain benefits.

This includes things like Universal Credit and Housing Benefit.

The lower limit remains at £6,000, meaning that any savings you have below that will be disregarded for benefits calculations.

The upper limit is usually £16,000 and will not be changing, meaning that if you have any savings over that, you won’t receive any benefits at all. 

If you have between £6,000 and £16,000, you’ll typically get a reduced amount, according to each benefit’s taper rules.

Surplus earnings limts are also frozen until March 2026.

If you earn more than £2,500 over the amount you can earn before your Universal Credit claim is stopped, you are said to have surplus earnings.  

These surplus earnings are then carried forward to the following month, where they count towards your earnings.

If your regular income and surplus earnings are then still over the amount where your payment stops, your Universal Credit payment will be affected.

3. Local housing allowance

Over one million private renters on Universal Credit will see the help they get with payments frozen next year.

Local housing allowance (LHA) rates will remain at their current level from April 2025.

This decision, confirmed after the Autumn Statement, will impact around 1.6million households, resulting in a shortfall of as much as £3,129 a year in areas with the highest rents..

The LHA sets the maximum amount people renting from a private landlord can claim in housing benefit or Universal Credit.

Rates vary based on property size as well as by location, and In theory should equal your area’s lowest affordable housing rents.

Rising rents and frozen rates leave households having to cover more of their rent costs, as benefit payments have not kept up.

Rates were increased in April this year to cover the cheapest 30% of local market rents at, based on values for September 2023, giving hundreds of thousands of households a boost of up to £4,200 a year.

Before that, they had been frozen since 2020.

Maintaining the freeze to the LHA in 2025/26 will leave renters with an average shortfall of £14 per week, or £730 a year, according to the Resolution Foundation.

This will be far higher in areas with higher rents, such as inner London, with shortfalls of up to £60 a week, or £3,129 a year.

You can check your LHA rates on the government website at lha-direct.voa.gov.uk.

We’ve mapped the maximum amount you can get for a three-bedroom property below.