January 2025 payment dates for benefits and pensions as DWP to launch disability consultation

All the essential cost of living information you need

As the new year begins, millions will be looking to balance the expense of the winter season with ever-increasing household costs. Across the UK, people continue to grapple with high prices as the rampant inflation of the past few years has left essentials costing more than ever before.

Household bills, groceries, mortgages and rents have all hit record highs, as the country navigates the ongoing cost of living crisis.

Inflation saw an unwelcome spike to 2.6 per cent in November, continuing the steep rise of late 2024. Many had hoped that the figure would sink back below the Bank of England’s 2 per cent target as it did in September, with living costs greatly outpacing wage growth over the past few years.

In October, Labour unveiled its first Budget in power with Rachel Reeves promising to “support people with the cost of living.” The chancellor confirmed that the national living wage would rise by 6.7 per cent next year, while the state pension will be uprated by 4.1 per cent, and benefits by 1.7 per cent.

However, the latest stories from low-income households still paint a bleak picture of the UK’s economic situation. Recent research from The Joseph Rowntree Foundation 100,000 more children and 300,000 adults are set to be in poverty by October 2029 if further action is not taken by the government.

Meanwhile, thousands of pensioners still wait for their £200-300 winter fuel payment after Labour’s choice to cut back the cold weather benefit. In December, The Independent revealed that increased pressure on the DWP meant many were waiting over 100 days.

Against this challenging economic backdrop, here is an overview of the financial support available to households this December and key dates for benefits recipients to look out for:

Benefit payment dates in January

Venefits and pension payments will be going out as normal in January for the most part. These are:

• Universal Credit
• State pension
• Pension credit
• Child benefit
• Disability living allowance
• Personal independence payment
• Attendance allowance
• Carer’s allowance
• Employment support allowance
• Income support
• Jobseeker’s allowance

However, all benefits set to be paid on New Years’ Day (1 January) will instead be paid the day before, on New Years’ Eve (31 December). Most payments set to go out on 2 January will instead be paid on New Years’ Day too, except for Universal Credit which will still be paid on this day.

The DWP has also confirmed that a consultation will be launched in Spring 2025 on planned reforms to sickness and disability benefits. Minister Liz Kendall says the changes will be designed “to ensure the system is better supporting people.”

For more information on how and when state benefits are paid, visit the government’s website.

A report from Policy in Practice this year shows that nearly £23bn in benefits goes unclaimed a year – they offer a helpful calculator to work out what you might be entitled to.

Have you been having issues with the DWP recently? Get in touch via email: albert.toth@independent.co.uk

Household support fund

The Household Support Fund (HSF) is funding given to all local councils to support vulnerable households in their area. Councils are free to allocate the funds however they feel is best.

For instance, some have provided cash grants, supermarket vouchers, or energy bill assistance. Visit your local council’s website to find out what help may be available.

In August, Labour confirmed that they would extend the Conservative-created scheme for another six months beyond the September 30 end date. This means it should now continue until the end of March 2025.

To find out what support is available, the End Furniture Poverty charity offers a helpful assistance finder tool.

Other help available

Budgeting advance loans

The government offers a ‘budgeting advance loan’ for people on Universal Credit who face an emergency lack of money. The loan has a maximum repayment period of two years.

These loans are interest-free, and automatically deducted from Universal Credit payments. You can borrow an ‘advance’ of up to:

• £348 if you’re single
• £464 if you’re part of a couple
• £812 if you have children

Following the Labour Budget in October, a new cap has been introduced on the amount the DWP can deduct from benefit payments to repay loans and debts, including budgeting advance loans.

From April 2025, deductions from universal credit will be capped at 15 per cent of the standard allowance, down from 25 per cent.

Charitable grants

If you are struggling financially, you may be eligible for certain charitable grants. There are a wide range of grants available depending on your circumstances.

However, these grants will typically require you to meet specific criteria and only be able to offer limited funds.

Charitable grants are available for people who are disabled or ill, carers, bereaved, unemployed, students – and many more. The charity Turn2us has an online tool to search for grants which may be available to you.

Energy provider help

A number of energy suppliers offer help for those struggling with their energy bills. These include Scottish Power, EDF, E.ON and Octopus. It is worth contacting your energy provider to find out if you are eligible.

British Gas also offer a grant of up to £2,000 to customers of any energy provider. You will need to meet specific criteria to be eligible, and can apply on the British Gas Energy Trust website.

Council tax reduction

If you meet certain criteria or are on certain benefits, you may be able to apply for a discount on your council tax discount of up to 100 per cent.

Your local council may still be able to offer you a discretionary reduction if you are able to demonstrate you are facing severe hardship and can’t afford to pay your council tax.

To apply for a council tax reduction, you can contact your local council via the government’s website.

Warm home discount

The warm home discount is a one-off £150 discount on your electricity bill. It will be taken automatically from your energy bills if you are eligible.

To qualify, the bill payer must be on a low income with high energy costs or get the guarantee credit element of pension credit.

Up to 30 hours of free childcare

All working parents in the UK are currently entitled to 30 hours of free childcare for children aged 3 to 4. From April 1, this entitlement expanded to include 15 hours of free childcare for 2-year-olds.

From 1 September, this was expanded again to include all children from the age of nine months.

You must apply online and reconfirm your eligibility every three months, in time for each school term. Working parents can also apply for tax-free childcare, giving back 20p for every 80p you put towards childcare, up to a maximum of £500 a year.

The final expansion to free childcare, coming in September 2025, will see all children under five eligible for 30 hours.

Will benefit rates be going up soon?

Following the chancellor’s Budget announcement, it was confirmed that all benefits will be uprated by 1.7 per cent, matching the September 2024 inflation figure.

While this is not unusual, campaigners had called for Labour to consider a slightly higher increase. Inflation had been higher in previous months, beginning at 4 per cent in January and rising above 2 per cent again from October.

The increase will apply to all working-age benefits, including universal credit, PIP, DLA, attendance allowance, carer’s allowance, ESA and more.

In line with the triple lock, the State Pension will rise by 4.1 per cent – up £472 a year – matching wage growth in 2024.

Both increases will take effect from April 2025.

Energy Price Cap: Will it go up or down again in 2024?

Ofgem’s energy price cap has risen from £1,717 to £1,738 for January to March – an increase of 1.2 per cent. This will mean higher bills for most households as the cold weather continues to bite.

The rise is the second consecutive increase, with a massive 10 per cent spike in October. Analysts predict a further 3 per cent increase will come in April. Several other bills are expected to increase around the same time.

The energy price cap is the maximum amount energy suppliers can charge you for each unit of energy if you’re on a standard variable tariff. That includes most households. It is expressed as an annual bill for an average home.

The change in prices is reflective of the cost of wholesale energy – the amount energy firms pay for their electricity and gas before supplying it to households.

Do you have an experience to share about the cost of living in the UK? Or any advice to share to help others? Get in touch via email: albert.toth@independent.co.uk