What to do about universal credit deductions for debt

How to deal with deductions from your universal credit if you can't afford them.

When you could have deductions

The Department of Work and Pensions (DWP) can deduct money from your universal credit to pay off benefit advances or overpayments, and some other priority debts.

Find out when your universal credit payment can be reduced.

Options for dealing with deductions

Universal credit deductions can make it even harder to budget for the basics.

Your main options could be to:

  • ask for lower deductions
  • challenge a decision if you think it's wrong
  • negotiate a more affordable repayment plan for third party debts

A debt adviser could help.

When you can ask for lower deductions

You can ask the DWP to reduce your deductions for the following:

  • advances
  • rent arrears
  • budgeting loans
  • hardship payments
  • benefit and tax credit overpayments

You need to show that you can't afford the current deductions.

You'll be asked about your income and outgoings, and if there are any special reasons why the deductions are unaffordable.

You can't ask the DWP to reduce the rate of deductions for energy or water debts, or council tax arrears. But you should get the chance to dispute the arrears if you disagree with them.

Who to contact about deductions

For advances, rent arrears, energy and water debts, and council tax arrears, use your online account or call the universal credit helpline on 0800 328 5644

The universal credit helpline is very busy due to coronavirus. It may be easier to leave a note in your online journal.

For budgeting loans and overpayments, call DWP debt management on 0800 916 0647

Advances

You usually have to repay a universal credit advance or budgeting advance within 12 months.

Deductions start from your first monthly payment after the advance.

If you can't afford them, you can ask to:

  • delay repayments of a universal credit advance for up to 3 months
  • extend the repayment period for a budgeting advance up to 18 months

Rent arrears

Your current landlord can ask the DWP to make deductions if you owe at least 2 months' rent.

You should be given the chance to dispute the arrears if you disagree with them.

Ask your work coach or universal credit helpline adviser for a lower rent arrears deduction if it's above the minimum and you can't afford it.

Monthly deductions for rent arrears, rounded to the nearest pound

 

Minimum deduction

Maximum deduction

Single claim - aged under 25

£34

£69

Single claim - aged 25 or over

£41

£82

Joint claim - both aged under 25

£49

£98

Joint claim - either of you aged 25 or over

£59

£119

Budgeting loans

You might still be paying off a budgeting loan if you transfer from another benefit onto universal credit. It usually has to be repaid within 2 years.

Deductions for budgeting loans are currently paused until at least July due to coronavirus. 

Benefits and tax credit overpayments

You may have deductions if you've been overpaid benefits or tax credits in the past. 

Deductions for overpayments are currently paused until at least July due to coronavirus.

How different debts are prioritised

The DWP have a priority order for deductions.

Deductions for advances, rent arrears and other third party debts are prioritised above budgeting loans and overpayments.

You can't have more than 3 deductions made for third party debts.

Total deductions shouldn't usually be more than a maximum monthly amount.

The DWP can only deduct more than this as a last resort to help prevent an eviction or disconnection of your gas or electricity.

From 6 April 2020 the maximum monthly deduction for all debts is usually:

Single claim - aged under 25

£102.82

Single claim - aged 25 or over

£122.97

Joint claim - both aged under 25

£146.58

Joint claim - either of you aged 25 or over

£178.21

How to challenge a decision

Ask for an explanation through your online account if you think your deductions have been calculated wrongly.

If you still disagree or don't get a response, you can ask for a formal review of the decision. This is called a mandatory reconsideration.

Find out more about the mandatory consideration process from Citizens Advice

Negotiate over rent arrears and other third party debts

You may be able to negotiate a more affordable repayment plan for the following types of deductions: 

  • rent arrears
  • council tax arrears
  • gas, electricity or water debts

Speak to your landlord, council or utility provider directly to try and agree a repayment plan outside the universal credit system.  

They can ask the DWP to cancel the deductions if you come to an agreement.

Landlords and other third parties may be reluctant to agree to a different arrangement if they're already getting regular instalments through universal credit deductions. 

A debt adviser could help negotiate.

Find out how to deal with rent arrears.


Last updated 12 May 2020 | © Shelter

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