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Explanatory note

Original text. Later amendments are not shown.

(This note is not part of the Regulations)

These Regulations amend the Employment and Support Allowance Regulations 2008 (S.I. 2008/794) (“the ESA Regulations”) and the Universal Credit Regulations 2013 (S.I. 2013/376) (“the UC Regulations”) to give effect to the requirements in the Universal Credit Act 2025 (c. 22).

The Universal Credit Act 2025 (“the Act”) requires the Secretary of State to increase the amount of Universal Credit (“UC”) standard allowance, and the income-related employment and support allowance (“ESA IR”) personal allowance rates, by at least the annual increase in the Consumer Prices Index (“CPI”) to September 2025 and then by a further 2.3%. An additional amount (“the LCWRA element”) is added to the standard allowance when calculating a UC award to provide for the fact that a claimant has limited capability for work and work-related activity (“LCWRA”). The Act reduces the rate of the LCWRA element of UC from 6th April 2026 for claimants newly determined to have LCWRA and provides for a protected amount of the LCWRA element for a pre-2026 claimant, a severe conditions criteria claimant and a claimant who is terminally ill. The Act also requires the Secretary of State to ensure that adding together the protected LCWRA element and the standard allowance results in at least the same entitlement as adding those amounts for the previous tax year together and increasing the total by the CPI percentage for the current tax year.

The Secretary of State is also required by the Act to ensure that the total sum of any combination of the ESA IR personal allowance, the ESA IR support component and the ESA IR severe and/or enhanced disability premia which a person could be entitled to results in at least the same entitlement as adding those amounts for the previous tax year together and increasing the total by the CPI percentage for the current tax year.

Regulation 2 amends the ESA Regulations so as to insert a new Part A1 into Schedule 4, which sets out the prescribed amounts for an ESA IR award, which are increased in accordance with the Act. Existing Part 1 of Schedule 4 to the ESA Regulations is amended so that the amounts set out in it relate to the calculation of the amount of a contributory employment and support allowance (“ESA C”). Regulation 67 of the ESA Regulations is amended to reflect new Part A1 and further amendments are made to Part 1 of Schedule 4 to omit provisions that relate to ESA IR.

Paragraphs (5) and (6) of regulation 2 amend paragraph 11(2) and (4) of Part 3, and paragraph 13 of Part 4, of Schedule 4 to the ESA Regulations to increase, in accordance with the Act, the weekly amount of the severe and enhanced disability premia, and the support component, paid as part of an ESA IR. Further consequential amendments to the ESA Regulations in connection with amendments made by regulation 2 are set out in the Schedule.

Regulation 3 amends the UC Regulations so as to increase, in accordance with the Act, the UC standard allowance and the amount of the LCWRA element that applies to a pre-2026 claimant. This Regulation also inserts new Schedule 5A into the UC Regulations, which sets out further circumstances in which a claimant with LCWRA is a pre-2026 claimant.

Those circumstances are where, before 6th April 2026—

  1. (a)

    a claimant is awaiting an assessment under Part 5 of the UC Regulations, and on or after 6th April 2026, it is determined that the claimant has LCWRA,

  2. (b)

    a claimant with limited capability for work is awaiting a reassessment under Part 5 of the UC Regulations, and on or after 6th April 2026, it is determined that the claimant has LCWRA,

  3. (c)

    a claimant has been determined to have LCWRA but their award does not include the LCWRA element because of the waiting period, and on or after 6th April 2026 the LCWRA element is included in the award,

  4. (d)

    a claimant is entitled to an employment and support allowance that includes the support component and they remain so entitled continuously on and after 6th April 2026 until the date on which the award of UC including the LCWRA element is made to the claimant.

Regulation 4 makes transitional provisions modifying Schedule 4 to the ESA Regulations in relation to cases falling within paragraphs 2 to 7 of Schedule 2 to the Employment and Support Allowance and Universal Credit (Miscellaneous Amendments and Transitional and Savings Provisions) Regulations 2017 (S.I. 2017/204) (“the 2017 Regulations”). The 2017 Regulations amended the ESA Regulations and the UC Regulations to remove the additional amount added to a UC or ESA award for the fact that a claimant had limited capability for work (“LCW element”). The transitional provisions in regulation 4 relate to persons who retained the LCW element under the transitional and savings provisions in the 2017 Regulations.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, public or voluntary sectors is foreseen.