Millions of households have had their payments reduced
Universal Credit claimants may find money withdrawn from their payments through ‘deductions’ to clear a variety of outstanding debts. The amounts deducted can be redirected to the DWP, to creditors, or even directly to your landlord.
Recent Department for Work and Pensions figures revealed that 3.3 million households receiving Universal Credit in February this year had one or more deductions taken from their benefit payment before it reached their account. Nearly half of all Universal Credit claimants have had their payments reduced in this way at some point, which is a rise of 300,000 claimants in the past 12 months.
The DWP also holds a comprehensive list of the types of debt that can result in your benefit being cut. However, deductions are generally capped at 15% of your standard allowance to prevent claimants from falling into deeper financial hardship while repaying their debts.
Types of debt that can be deducted from Universal Credit payments:
- Advance payments
- Universal Credit overpayments
- Tax credit and Housing benefit overpayments
- Recoverable hardship payment
- Budgeting and crisis loan repayment
- Third party deductions
The majority of these loan, hardship and overpayments are returned to the DWP. Deductions directed towards other people or organisations fall under third party deductions.
This can include:
- utilities, like electricity, gas and water
- Council Tax
- child maintenance
- rent
- service charges
- court fines
A maximum of three third party deductions can be taken from your account at any one time. You will be notified in advance when a third party deduction is about to begin.
Should your landlord request a deduction to cover rent arrears or service charge debts, you have just seven days to inform the DWP if you wish to contest the deduction, with a further seven days to submit evidence explaining why you believe it should not be applied.
You have the right to dispute these deductions if you owe your landlord less than two months’ worth of rent and service charges. These arrears must relate solely to rent and/or service charges, as any other money owed to your landlord does not count towards this total.
Official DWP guidance states that “it is not possible” to establish how much will be deducted from your payment before a calculation of your earnings and benefits occurs at the end of each assessment period.
In the majority of cases, deductions are capped at a maximum of 15% of your standard allowance. However, this percentage can rise if you are subject to a ‘last resort deduction’.
Last resort deductions will go towards:
- Meeting your child maintenance obligations
- Preventing you from being evicted
- Stopping your utilities from being cut off
