MILLIONS of Universal Credit recipients are losing an average of £63 a month due to automatic deductions.
The deductions, meant to repay debts including past overpayments and emergency advance payments, have slashed basic welfare payments by 8%, according to the New Economics Foundation.
It means the average claimant is losing up to £756 a year, which equates to a loss of £1 for every £13 due.
There are a number of reasons why the Department for Work and Pensions (DWP) will deduct money from your Universal Credit allowance to help pay off any debts.
Conor Lawlor, benefits expert at Turn2us, says: "These debts can accrue in several ways, including for Universal Credit and other benefit overpayments (even if the overpayment was made in error by DWP), benefit advances and recovering hardship payments.
"The DWP can also deduct on behalf of third parties if a claimant is in debt to them, including for rent and service charge arrears, council tax arrears, court fines, child maintenance, and for utilities like electricity, gas and water."
According to the latest statistics as of February 2023:
But hundreds of thousands more claimants are losing out from other deductions.
However, it's important to note that not every deduction is compulsory, and some are voluntary.
With the help of benefits charity, Turn2Us, we've listed all the ways in which your Universal Credit payments could be reduced.
One of the most common reasons for a Universal Credit deduction is because a claimant applied for advance payments, according to Conor.
This is an optional load you can apply for if you don't have enough to live on while you wait for your first payment.
When you make a new claim for Universal Credit, you will normally receive your first payment seven days after the end of your first assessment period (four weeks) - this is known as the "five-week wait".
You can apply for an advance payment of your Universal Credit if you are in financial hardship while you wait for your first payment, for example, if you can’t afford to pay your rent or buy food.
However, as this is a loan, you will be expected to pay it back.
This is done through deductions.
The first deduction is made on the day you get your first payment.
You must usually pay back the advance within:
You can ask for your repayments to be delayed if you cannot afford them. Repayments can be delayed for:
However, this is only allowed in exceptional circumstances.
You’ll be told how much will be deducted by letter or in your Universal Credit journal.
THE most that can be taken from your Universal Credit payments each month is 25% of your Universal Credit standard allowance.
This is unless any last resort deductions are being taken.
In this case, your deductions may be more than 25% of your standard allowance.
If you are part of a joint Universal Credit claim, you and your partner will receive a joint Universal Credit payment for your household, paid twice a month.
If you or your partner have debts or deductions, these will be taken from your Universal Credit payments before you get them.
The budgeting advance should not be confused with an advance payment.
Instead, this is an interest-free loan that can be used to cover certain expenses like household furniture, equipment, and clothing.
What you get will depend on how much you need.
The smallest amount you can borrow is £100. You can get up to:
To get a budgeting advance, you'll need to either:
You will not be eligible if either:
The budgeting loan repayments will be taken automatically from your benefits.
The amount you repay is based on your income.
A budgeting advance should normally be repaid within one year, but this is extendable to 18 months in exceptional circumstances.
If you've been paid too much Universal Credit you'll accure an overpayment.
To learn more about an overpayment, sign into your online Universal Credit account, go to your journal, and look for a message about overpayments.
If you believe you have been overpaid but have not heard from Universal Credit, you need to contact Universal Credit to tell them about this to avoid facing a penalty.
If you were overpaid Universal Credit as a couple and have now separated, you'll each be expected to pay half of the overpayment.
If money is being deducted from your Universal Credit to pay back the overpayment, the amount deducted depends on your circumstances.
If you are receiving Universal Credit and have no earned income, the maximum amount that can be deducted from your Universal Credit for overpayments is 15% of your standard allowance.
If you are receiving Universal Credit and have some earned income, the maximum amount that can be deducted from your Universal Credit for overpayments is 25% of your standard allowance.
If you are getting tax credits and you claim Universal Credit, HMRC will be told to stop your tax credits.
However, if you receive tax credits after you have made your claim to Universal Credit this could result in you being paid too much tax credits.
Universal Credit will take action to get this money back as well as any other tax credit over-payments you have.
HMRC will send you a letter called "Your Tax Credits over-payments (TC1131)".
This will tell you about any tax credit repayments that will be taken out of your Universal Credit payments.
Different over-payments may be repaid from your Universal Credit payments at different times, and you may receive more than one letter.
If you deliberately do not provide details about a change in your circumstances that could affect your Universal Credit payments or you give false information, this is fraud.
A fraud penalty or sanction will reduce your Universal Credit standard allowance.
This can be up to 100% of your standard allowance if you are single, or up to 50% for each person in a joint claim.
If a fraud penalty or sanction is being taken from your Universal Credit payments, no other repayment or deduction will be taken, except for last-resort deductions.
YOU may have more than 25% of your Standard Allowance taken off if you pay a "last resort deduction".
A "last resort deduction" helps to prevent you from being evicted or having your utilities cut off.
It is paid directly to the person or organisation you owe money to.
A third-party deduction is an amount that is taken from your Universal Credit payments and paid direct to the person or organisation you owe money to, such as your landlord or your gas or electricity supplier (Fuel Direct).
Third-party deductions can also be taken, without your permission, for things like:
Only three third-party deductions can be taken at any one time.
Universal Credit will send you a message in your online journal when a third-party deduction starts.
Third-party deductions are fixed at 5% of your Universal Credit standard allowance for each third party.
However, for rent, deductions are fixed between 10% and 20%.
Unlike the other non-voluntary deductions listed above, claimants can initiate deductions for certain bills to help better manage their costs.
For example, you can contact your energy supplier to set up deductions for your ongoing bills through the Fuel Direct scheme.
In addition to making deductions to claimants benefit payments, the DWP can also collect money owed from wages.
Money owed for benefit overpayments can be taken directly from your wages via a Direct Earnings Attachments (DEA).
In this scenario, the DWP will contact an employer, and payments will go directly from the employer to the DWP.
However, the DWP will write to you before starting the DEA, and you might be able to avoid it by agreeing to payment installations.
Turn2us highly recommends getting debt advice as soon as possible before disputing or accepting any payment plan.
Conor said: "The benefit office should write to give reasons why deductions are taking place.
"If not, the claimant should request this.
"For example, it is possible to dispute an overpayment, but a claimant should be able to provide the necessary evidence to prove why they think they haven't been overpaid a benefit or don't owe a debt."
Claimants can contact DWP Debt Management to talk through their options, including what they can afford to pay, and if they need help managing repayments.
The DWP Debt Management contact centre can be reached via 0800 916 0647.
There are several groups which can help you with your problem debts for free.
You can also find information about Debt Management Plans (DMP) and Individual Voluntary Agreements (IVA) by visiting MoneyHelper.org.uk or Gov.UK.
Speak to one of these organisations - don't be tempted to use a claims management firm.
They say they can write off lots of your debt in return for a large upfront fee.
But there are other options where you don't need to pay.
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