Freezing the Universal Credit Health Element (UCHE) From 2026/27, the award rate of UCHE will be frozen for existing claimants and new claimants will receive a lower award of £50 a week, also frozen. This freeze will last through to 2029/30 and generate £3 billion of savings in that year.
Universal Credit Standard Allowance: increase above inflation In parallel with the changes to the Health Element, the Standard Allowance for Universal Credit will be uplifted above inflation for new and existing claimants, reaching CPI + 5% by April 2029. The cost of this will be nearly £1.9 billion by 2029/30.
Welfare fraud and error Increased checks on potential Universal Credit claimants and the recruitment of 500 more fraud and error staff are together projected to produce £240 million of savings by 2029/30.
Tax administration measures
Tax debt collection Additional funding will be provided to increase HMRC debt management capacity by expanding the use of third-party debt collection agencies. In addition, HMRC will recruit an extra 500 compliance staff, starting in April 2025 and 600 more debt management staff, starting in April 2026. Together these moves are projected to raise an extra £810 million by 2029/30.
Increase in late payment penalties Late payment penalties for VAT and Making Tax Digital (MTD) for income tax self assessment (ITSA) will increase from April 2025. The new rates will be:
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3% of the tax outstanding where tax is overdue by 15 days; plus
3% where tax is overdue by 30 days; plus
10% per annum where tax is overdue by 31 days or more.
The higher penalties are projected to raise £125 million by 2029/30.
Expanded rollout of MTD for income tax self assessment From April 2028, MTD for ITSA will apply to taxpayers with trading or property income over £20,000. The threshold from April 2026 is £50,000. This is projected to generate £120 million in 2029/30.
High Income Child Benefit Charge (HICBC) From summer 2025, Child Benefit claimants (or their partners) who are employed and newly liable for HICBC will be able to pay the tax charge through Pay As You Earn (PAYE) without being required to submit a self assessment tax return.
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