Major updates to DWP benefits and pensions are coming in 2025, impacting millions of claimants across the UK
London: Big changes are on the way for benefits and pensions from the Department of Work and Pensions in 2025. If you’re a claimant, you’ll want to pay attention to these updates that could affect millions.
First off, if you’re looking to boost your state pension, there’s a deadline coming up. You can top up your National Insurance payments for the years 2006-7 to 2015-6 until April 5, 2025. This is a great chance to increase your entitlement.
To get the full new state pension, you need 35 qualifying years on your National Insurance record. If you have gaps, you might end up with less than you expect. But don’t worry, you can buy those missing years or claim free credits to fill in the blanks.
Now, let’s talk about some good news. Starting in April 2025, benefit claimants will see an increase in their payments. Chancellor Rachel Reeves announced that working-age benefits will rise by 1.7%, matching last September’s inflation rate.
The DWP has to raise nine benefits each April according to inflation, while others like Universal Credit need Parliament’s nod. Plus, state pensioners can look forward to an increase thanks to the Triple Lock promise.
The Triple Lock means your state pension will go up based on the highest of three factors: the Consumer Price Index, average wage growth, or a flat 2.5%. Right now, wage growth is at 4%, so those on the New State Pension can expect an annual boost of £461 from April 2025.
For those on the Old State Pension, the increase will be around £353. And don’t forget, the National Minimum Wage is also set to rise by 6% in April, which is a nice perk for workers.
For folks aged 21 and over, the minimum wage will jump to £12.21 an hour. If you’re 18 to 20, it’ll be £10.00, and for apprentices and those under 18, it’ll be £6.40.
Also, the earnings threshold for Carer’s Allowance will go up from £151 to £196. This means carers can work more hours while still receiving their allowance, which is a big win for many.
Just a heads up, Tax Credit benefits will be phased out on April 5, and those still receiving them have been advised to switch to Universal Credit. If you’re making the switch, expect a five-week wait for your first payment.
Looking ahead, Scotland will launch a new Pension Age Winter Heating Payment in December 2025, replacing the Winter Fuel Payment. Meanwhile, the Cold Weather Payment scheme will kick off in England, Wales, and Northern Ireland.
By the end of December 2025, legacy benefits will also come to an end. The DWP is working on transferring people on income-related ESA to Universal Credit, and this process should wrap up by the end of the year.
Don’t worry too much, though. Most people will get the same amount or more on Universal Credit compared to their previous benefits. If you’re entitled to more, there’s a top-up option called transitional protection.
