Nearly four million households receiving Universal Credit on the standard rate will receive an extra £295 annually from April, the Department for Work and Pensions (DWP) has confirmed.
The increase means single claimants aged 25 and over will see monthly payments rise from £400.14 to £424.90, an additional £24.76 per month.
It marks the first sustained above-inflation rise to the benefit and forms part of a wider package of welfare reforms.
The Government said the changes are designed to support people into employment while addressing cost-of-living pressures.
Ministers have pledged to invest more than £3.5billion into employment support by the end of the decade.
For a single person aged 25 or over, the increase equates to around £295 extra per year in cash terms.
This figure is projected to rise to £760 annually by the end of the decade.
The policy is intended to ensure those who are seeking work or already employed retain more income as they progress.
Universal Credit receivers will receive an extra £295 annually
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The reforms come amid changing labour market conditions.
The Office for National Statistics estimated unemployment for those aged 16 and over reached 5.1 per cent between September and November, compared with 4.4 per cent during the same period in 2024.
Alongside the increase, changes will be introduced for new claimants with health conditions.
From April, a lower Universal Credit health element rate of £217.26 per month will apply to new applicants, compared with the current higher rate of £429.80.
The existing system results in those receiving health-related support being paid more than double the standard allowance
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The DWP said the existing system results in those receiving health-related support being paid more than double the standard allowance without sufficient employment support.
Those with the most severe or lifelong conditions, individuals nearing end of life and all existing claimants will continue to receive the higher rate.
Work and Pensions Secretary Pat McFadden said: “The benefits system we inherited was rigged with the wrong incentives and wrote people off instead of backing them.”
He added: “These reforms put more money in the pockets of working people on Universal Credit, whilst ensuring those who can work get the support they need to do so.”
Mr McFadden said: “By boosting the standard allowance and investing in proper employment support, we’re building a welfare system that rewards work and offers people a route to a better future.”
The DWP said the previous system created “perverse incentives” that the April reforms are intended to address.