The boost will happen because the department has cut the debt repayment rate from the Universal Credit standard payment from 25% to 15% as they introduced the Fair Repayment rate. This is the government’s plan to put more money into the UK people’s pockets and support them in enhancing their standard of living.
These steps are government efforts to ensure that Universal Credit is doing its job, that is, helping people to ensure they can survive the rising cost of living. With the Fair Repayment Scheme, the Universal Credit recipients can expect an annual boost of up to £420 while repaying their debt.
Universal Credit Boost 2025
| New Initiative | Fair Repayment Rate |
| Purpose | Reduce the debt deduction rate in the UC from 25% to 15%, which boosted the UC payment |
| UC boost | £420 annually and around £35 monthly |
| Max. UC payout | Up to £628.10 |
| Who can experience the boost? | People who repay the debt via UC payout cut |
| Benefit | More UC payout, and the debt will be repaid too |
| Beneficiaries | Around 1.2 million households |
| Effective from | After or on 30 April 2025 for all assessment periods |
| Press Release Link | https://www.gov.uk/government/news/universal-credit-change-brings-420-boost-to-over-a-million-households |
| Official Website | UK Government Website |
Who can expect the boost?
The UK citizens who receive the Universal Credit payout can experience a reduction in their standard payment when they owe money to the department or government, such as:
- You have taken the advance UC payout for emergency support or anything else, and now you have to repay it.
- You have received a UC payout of more than your eligibility or situation; now you have to return the overpayment to the DWP.
- You have received too much payout from tax credits or benefits other than UC, such as housing benefits, etc., so you have to return the overpaid amount to the authority.
- You have taken the budgeting and crisis loan under the UC, and now you have to pay back the loan as per the terms you have agreed on.
- You have experienced a cut in your Universal Credit payout due to the third-party deductions, such as debts from council tax, service charges, rent, court fines, etc.
- If you have applied for a hardship payment when your UC is reduced due to the penalty or sanction, you have to pay it back once the sanction or penalty has ended.
Fair Repayment Rate
The Chancellor Rachel Reeves presented the Fair Repayment Rate scheme at the Autumn Budget as a part of their efforts to fight poverty, raise the standard of living, and combat the cost-of-living crisis going on for low-income households.
The scheme forces the debt deduction rate from the Universal Credit standard allowance payment to 15% from the earlier rate of 25%, which used to take a great portion of their Universal Credit, making it hard for them to have enough payment.
With the cut in rate, the government intends to ensure that the working people have enough support and that the low-income households can survive the financial crisis as well as repay their debts in a sustainable way without affecting their UC payment that much.
According to DWP, around 2.8 million households get their UC payment deducted due to the debt, out of which 1.2 million households will get to keep more of their payment through this scheme, where 700,000 are families with children.
UC payout
The DWP has increased the benefits payment from April 2025, which has increased the UC payment as well from its earlier rates. The Universal Credit payment is based on the standard allowance or the additional payment you qualify for, so recipients wondering about the current payout can check the rates below:
- Standard Allowance
- For singles and those aged under 25, receive the monthly payout of £316.98.
- For singles and those aged 25 or above, they can receive the monthly allowance of £400.14
- If both partner qualifies and are aged under 25, each can receive an allowance of £497.55
- If both partners are living together and one of them is 25 or above, both can get an allowance up to £628.10.
- Additional payout:
- People with dependent children may get an additional UC payout with a standard allowance for each child.
- If the child has a disability, then you may also qualify for the child disability payment up to £495.87 (for higher rate disability) and £158,76 for lower rate disability.
- UC recipients who paid for the childcare costs as both parents are working can recover 85% of the childcare charges via UC.
- If the UC recipients have disabilities or serious conditions, they can expect more payments to cover the cost-of-living increase.
With the fair repayment rate, the UC recipients whose payout was cut due to debt repayment can expect a boost of £35 a month in their UC payout, which they used to receive before to cut.
Boost Applicable From
The new fair repayment rate scheme is applicable to US recipients from every assessment that begins on or after 30 April 2025, so it means from now on, your debt is cut to the rate of 15%, and you can get more than the UC payout.
The UC recipients wondering about their debt payment through their UC can check the information on the online journal, as the DWP will inform them about the debt and its deduction from UC. The recipients who are facing financial hardships or struggling to repay debt can ask the DWP to reduce the debt amount.
If DWP approves, your reduction in debt payment will be automatically applicable on your UC payout from the next assessment period, same as the new rate will be applicable from the assessment period after or on 30 April 2025.