It could be taken straight from your benefit

People on Universal Credit could have money taken off their payments through ‘deductions’ for a few key debts you might have. The deducted cash can go back to the DWP, to companies you owe or even your landlord.

Recent Department for Work and Pensions showed 3.3million households on Universal Credit in February this year had one or more deductions being taken from their benefit payment before it landed in their account. Nearly half of all people on Universal Credit have had their payments deducted from in the past, which is a rise of 300,000 claimants in the past 12 months.

The DWP also has a full list of the types of debt that can result in your benefit being deducted from. Yet deductions usually have to capped at 15% of your standard allowance to ensure you don’t go into more financial hardship while paying off your 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

Most of these loan, hardship and overpayments will go back to the DWP. Deductions that go to other people or companies 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 off your account at any one time. You will get a message when a third party deduction is due to start.

If your landlord has requested a deduction to pay off rent arrears or service charge debts, you only have seven days to tell the DWP if you object to the deduction and a further seven days to provide evidence about why you think the deduction shouldn’t be made.

You can object to these deductions being made if you owe your landlord less than 2 months’ rent and service charges. These arrears can be from only rent and/or service charges, other money owed to your landlord doesn’t count towards this total.

Official DWP guidance states “it is not possible” to say how much will be deducted from your payment before a calculation of your earnings and benefits takes place at the end of every assessment period. In most cases, you can only lose a maximum of 15% of your standard allowance to deductions. However, this can be even higher if you are paying 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