All the DWP benefit and pension changes coming in 2025

Big changes are on the cards for Department of Work and Pensions benefits and state pensions in 2025. Here we look at the details claimants may need to know and the changes affecting millions of people.

First up, there is a deadline if you want to top up National Insurance payments to boost your state pension. The deadline to pay voluntary NICs for the contribution years 2006-7 to 2015-6, in order to increase New State Pension entitlement, is extended to April 5 2025.

To claim the full new state pension, people need 35 qualifying years on their National Insurance record. If there are gaps in your record paying these, you could end up receiving much less than anticipated, but you can buy National Insurance years or claim free National Insurance credits to fill any gaps. Get the latest Welsh news headlines delivered to your email inbox every day

Currently, you can purchase missing National Insurance years dating back to 2006, but after the April 5 deadline, you will only be able to go back six tax years. A top-up for a missed qualifying year costs £824 and boosts your pre-tax annual state pension entitlement by £302.

Also coming in April 2025 benefit claimants will get more money. Chanellor Rachel Reeves confirmed in her October budget that working age benefits will go up by 1.7% in April 2025, in line with last September’s inflation rate.

The Department for Work and Pensions (DWP) is obliged by law to increase nine benefits in line with inflation each April, while other payments, including Universal Credit, require Parliamentary approval. State pension recipients can also expect an increase as part of the Triple Lock promise.

The Triple Lock scheme ensures state pension payments rise by the highest of three elements: the Consumer Price Index (CPI) for September, average wage growth between May and July, or 2.5%.

State pensions will increase by wage growth, which currently stands at 4%. The 3.4 million people claiming the New State Pension will get an annual rise of £461 from April 2025. Those receiving the Old State Pension can expect a £353 annual increase from April.

The National Minimum Wage will also rise. In April it will go up by 6% in April – this means:

For people aged 21 and over it will rise to £12.21 per hour.
For 18- to 20-year-olds it will rise to £10.00 per hour.
For apprentices and those under 18 it will rise to £6.40

In April the earnings threshold for the Carer’s Allowance will also increase from £151 to £196. The rise, announced in Labour’s Autumn Budget, allows allow carers to work an additional 16 hours a week at the minimum wage or £45 a week, raising the limit to £196 a week.

Currently, Carer’s Allowance, claimed by approximately 1.4 million people in the UK,is awarded if you care for someone for at least 35 hours a week. You can work alongside it, but you cannot earn over £151 a week after tax, National Insurance, pension contributions, and allowable expenses – if you earn even £1 over, then you lose your entire entitlement for the benefit – but that rises to being allowed to earn £196 a week and still claim from April.

Tax Credit benefits will be discontinued on April 5 and all remaining accounts shut. The thousands of people currently receiving Tax Credits have been issued a Migration Notice in the last few years, advising them to apply for Universal Credit as an alternative.

According to the DWP’s website: “Your 2024 to 2025 Tax Credits notices may show some predicted payments for the tax year 2025 to 2026. These are automatically generated and should be disregarded.” After they claim under the new system people must expect a five-week wait for the initial Universal Credit disbursement, which will then continue, depending on any changes in the claimant’s situation.

In December 2025 In Scotland, the new benefit Pension Age Winter Heating Payment is expected to be launched, replacing the Winter Fuel Payment. In England, Wales and Northern Ireland, the Cold Weather Payment 2025 scheme opens.

The same month legacy benefits will end. All managed migration notices are expected to be sent by the end of December 2025. Across the UK, the transfer of people on income-related ESA to Universal Credit is expected to be complete.

This process, known as managed migration, has been gradually implemented in parts of Wales and the UK and will be complete by the end of this year. According to DWP instructions: “On universal credit, most people will be entitled to the same amount they received from their previous benefits or more. If the amount you are entitled to on your existing benefits is more than you will get on universal credit, a top-up is available. This is called transitional protection.”

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