Many benefit recipients will experience an increase in their earnings starting April 6th, following the introduction of updated payment amounts. This has been verified by official sources. Chancellor Rachel Reeves in the autumn Budget Next year, inflation-linked benefits will increase by 1.7% starting from the beginning of the new tax year on April 6, 2025.
The rise aligns with the Consumer Prices Index (CPI) inflation rate. inflation In September 2024, eligible UK households will receive an additional sum of money directly into their bank accounts. This increase covers working-age benefits such as Universal Credit, Personal Independence Payment (PIP), Attendance Allowance, and Employment and Support Allowance (ESA), along with several others.
Pensioners are also next in line for a payment boost starting from April 6 as the fundamental and updated version State Pensions will see an uplift of 4.1%, aligning with the yearly rise in the Average Weekly Earnings index from May to July 2024. Given that the State Pension scheme is divided into two parts — the basic and the new — the extent of the increment in pension payouts hinges on your retirement date.
Over 12 million retirees are expected to gain from the updated rates, as stated by the government. Those receiving the complete new state pension could see an additional £470 each year, whereas the full basic state pension will provide an extra £360 annually.
But while benefits and pension rates are increasing, the following benefits and allowances paid by the Department for Work and Pensions ( DWP and HM Revenue and Customs ( HMRC They will stay frozen at their present levels from April 6, which means claimants won’t receive additional money in the upcoming tax year.
Benefit cap - DWP
The benefit cap is an upper limit on the total amount of welfare assistance one can receive after which their payouts start decreasing. This rule generally impacts individuals between the ages of 16 and those who have not attained State Pension age. It applies to people applying for any of the following benefits:
- Universal Credit
- Bereavement Allowance
- Child Benefit
- Child Tax Credit
- Employment and Support Allowance
- Housing Benefit
- Incapacity Benefit
- Income Support
- Jobseeker's Allowance
- Maternity Allowance
- Severe Disablement Allowance
- Widowed Parent’s Benefit (also known as Widowed Mother’s Allowance or Widow’s Pension if you began receiving it prior to April 9, 2001)
The Department for Work and Pensions (DWP) has set the benefit cap at a fixed rate for the 2025/26 financial year, indicating that the maximum threshold will stay constant. The figures will be structured as below:
Annual limit for benefits (London area)
- Couples whether they have children or not, as well as single individuals with a child at a qualifying age — £25,323.00 (This equates to approximately £2,110.25 each month).
- Solo adults with no children - £16,967.00 (This equates to £1,413.92 monthly).
Annual limit for benefits (elsewhere in Great Britain)
- Couples whether they have children or not, as well as single individuals with a child at a qualifying age — £22,020.00 (This equates to approximately £1,835.00 each month).
- Solo adults living alone without kids - £14,753.00 (This equates to approximately £1,229.42 each month).
Capital limits - DWP
The capital limit refers to the maximum value of savings and investments one can hold while remaining fully entitled to receive benefits.
At present, the highest allowable capital sum stands at £16,000. If your savings and investments surpass this figure, you might become disqualified from receiving certain benefits altogether or could end up with a lower benefit amount. The threshold of £16,000 will stay unchanged during the 2025-26 financial year and will impact individuals claiming various forms of assistance such as Universal Credit, income-driven Jobseeker’s Allowance, Income Support, income-linked Employment and Support Allowance, and Housing Benefit.
More than 80 extra pensions - DWP
The over-80 pension is designed for individuals who are 80 years old or older. To qualify, one must receive an outdated basic State Pension amounting to less than £101.55 weekly or have no State Pension whatsoever. Starting from April 6th, the payment rate for this pension will stay fixed at a minimal sum of 25 pence.
The government states: "Individuals aged 80 and above get an extra 25 pence added to their state pension. This age-related supplement was established in 1971 due to 'the particular needs of very senior citizens who generally require assistance beyond what younger individuals might.' Since then, this supplement hasn’t been increased. Various administrations have contended that higher importance ought to be placed on safeguarding fundamental benefit levels or opted instead to allocate further funds towards aiding older retirees via alternative methods, like means-tested aid or one-off disbursements, including the Winter Fuel Payment."
Personal Allowance - HMRC
The basic Personal Allowance limit, which is the sum of income one can receive without being liable for taxation, stands at £12,570 as it is presently established. This figure will stay unchanged from April onwards.
Individuals earning from £12,571 to £50,270 will be subject to a tax rate of 20%. Those with an income ranging from £50,271 to £125,140 will face a tax rate of 40%. For those whose earnings exceed £125,140, they will have to pay taxes at a rate of 45%.
Should your earnings surpass £100,000, they will be reduced; specifically, for each additional £2 you make over this threshold, your tax-free Personal Allowance diminishes by £1.
High-income tax bracket - HM Revenue & Customs
For the 2025/26 tax year, the higher income tax bracket rate will stay unchanged at £50,270. This implies that individuals earning from £50,271 up to £125,140 will be subject to a 40% tax on their earnings exceeding the basic Personal Allowance limit of £12,570. Additionally, the extra rate threshold of £125,000 taxed at 45% remains frozen once more.
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