Universal Credit deductions DWP full list after millions face surge | Personal Finance | Finance
Universal Credit claimants may see money taken from their payments through ‘deductions’ to settle a range of outstanding debts. The deducted sums can be redirected to the DWP, to creditors or even your landlord.
Recent Department for Work and Pensions figures showed that 3.3 million households receiving Universal Credit in February this year had one or more deductions taken from their benefit payment before it landed in their account. Nearly half of all Universal Credit claimants have experienced their payments being reduced in this manner at some stage, which is a rise of 300,000 claimants in the past 12 months.
The DWP also maintains a detailed list of the types of debt that can lead to your benefit being cut. However, deductions are typically capped at 15% of your standard allowance to stop claimants from sliding into deeper financial difficulty 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 bulk of these loan, hardship and overpayments are returned to the DWP. Deductions sent towards other people or organisations fall under third party deductions.
A maximum of three third party deductions can be taken from your account at any one time. You will be notified when a third party deduction is due to commence.
If your landlord requests a deduction to cover rent arrears or service charge debts, you have just seven days to inform the DWP if you wish to challenge the deduction, with a further seven days to provide evidence explaining why you believe it should not be imposed.
You are entitled to dispute these deductions if you owe your landlord less than two months’ worth of rent and service charges. These arrears must relate exclusively to rent and/or service charges, as any other money owed to your landlord does not contribute towards this total.
Official DWP guidance confirms 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 most cases, deductions are capped at a maximum of 15% of your standard allowance. However, this percentage can increase if you are subject to a ‘last resort deduction’.
Last resort deductions will go towards:
