Universal Credit change brings £420 boost to over a million households

The Government says that more than one million households struggling with debt will get to keep an average £420 more of their benefits each year, under a change to Universal Credit which starts today (Wednesday 30th April 2025).

The Fair Repayment Rate places a limit on how much people in debt can have taken off their benefits to pay what they owe. The maximum amount that can be taken from someone’s Universal Credit standard allowance payment to repay debt has been 25% – but from today this is reduced to 15%. This will mean an average £420 extra a year for 1.2 million of the poorest households, including 700,000 households with children, while helping people to pay down their debts in a sustainable way.

The Fair Repayment Rate was introduced by the Chancellor at the Autumn Budget, as part of broader efforts to raise living standards, combat poverty, and tackle the cost-of-living crisis.

Chancellor of the Exchequer Rachel Reeves said “As announced at the budget, from today, 1.2 million households will keep more of their Universal Credit and will be on average £420 better off a year. This is our plan for change delivering, easing the cost of living and putting more money into the pockets of working people.

“With as many as 2.8 million households seeing deductions made to their Universal Credit award to pay off debt each month, the new rate is designed to ensure money is repaid where it is owed, and people can still cover their day-to-day needs.”

Work and Pensions Secretary Liz Kendall said “As part of our Plan for Change, we are taking decisive action to ensure working people keep more of the benefits they’re entitled to – which will boost financial security and improve living standards up and down the country.

“We’re delivering meaningful change to ensure everyone has a fair chance, the support they need, and real hope for the future.”