A range of benefits and the state pension have increased at the start of the new financial year, bringing higher payments for many households, particularly larger families.

The two-child benefit cap has been removed, allowing families to claim support for all children. Around 480,000 households with three or more children are expected to gain, with an average increase of £4,100 a year. Previously, support through universal credit or tax credits was limited to the first two children, a policy that saved the Treasury an estimated £3.6 billion annually.

The child element of universal credit will rise automatically from May, meaning eligible families do not need to take action. In addition, changes to the standard allowance mean around three million households will see an average increase of £120 this year.

However, not all changes are positive. The health element of universal credit, paid to those whose condition limits their ability to work, has been reduced for new claimants. Existing recipients, around 2.8 million people, are not affected.

Most other benefits, including disability payments and carer’s allowance, have increased by 3.8% in line with inflation. The state pension has risen by 4.8% under the triple lock. The new state pension now stands at £241.30 a week, while the basic state pension has increased to £184.90.

Alongside these changes, income tax thresholds remain frozen until 2031. As wages rise, more people will pay tax or move into higher bands, increasing Government revenue without changing tax rates.

Talk to us about the changes.