As the new year begins, millions across the UK continue to grapple with a severe cost of living crisis, with stagnant wages failing to keep pace with persistently high prices. While inflation fell to 3.2% in November, down from 3.6%, this only indicates a slower rate of increase, not a drop in costs.
Key Payment Dates for Benefits and Pensions
Most Department for Work and Pensions (DWP) payments will be issued as normal in January 2026. However, due to the New Year's Day bank holiday on Thursday 1 January, anyone scheduled to receive a payment on that date will instead be paid on Wednesday 31 December 2025.
This follows similar adjustments for Christmas, where payments due on Christmas Day and Boxing Day were brought forward to Christmas Eve. The benefits affected include Universal Credit, the state pension, Pension Credit, Child Benefit, and disability allowances like PIP and DLA.
The DWP is aiming to complete its migration of all legacy benefits, such as tax credits and income support, to Universal Credit by the end of January 2026.
Financial Support Available This Winter
Against a bleak economic backdrop, where research suggests 14 million adults are skipping meals and energy debts have soared to £4.4bn, claiming all entitled support is crucial. An estimated £24 billion in benefits goes unclaimed annually.
With temperatures plunging as low as -12C, the DWP's Cold Weather Payment scheme is now active. This provides a £25 payment for each seven-day period of freezing temperatures in eligible postcodes, supporting over one million households.
Other vital support includes the Household Support Fund, distributed by local councils, which offers help with bills and essentials until March 2026. Discretionary Housing Payments can assist with rent, and interest-free Budgeting Advance loans are available for Universal Credit claimants facing emergencies.
Future Increases and Important Changes
From April 2026, benefit rates will see significant changes. Universal Credit's standard allowance will rise by approximately 6.2%, equating to an extra £6 weekly for a single person over 25. Most other benefits, including PIP and Carer's Allowance, will increase by September's inflation rate of 3.8%.
A critical change involves the health-related element of Universal Credit. For new claimants from April, this will be cut from £105 to £50 per month, a reduction of over £200 monthly. Existing claimants will see their rate frozen until 2029.
The state pension will increase by 4.8% from April, in line with earnings growth, taking the weekly amount to £241.05.
Additional Help for Households
Further assistance is available from various sources. Many energy suppliers, including British Gas and Octopus, offer support schemes and sometimes free items like electric blankets. Social tariffs for broadband and water bills provide reduced rates for eligible low-income households.
Council tax reductions of up to 100% may be available, and from September 2025, all working parents became entitled to 30 hours of free childcare for children under four.
It is important to note that the government has not announced any continuation of the direct Cost of Living Payment scheme beyond February 2024.
For those struggling with mental health amid financial pressure, support is available from Samaritans on 116 123 and Mind on 0300 102 1234.
