Debts which can be deducted

Deductions can be made for debts owed to the DWP other organisations or individuals.

Deductions for debts owed to the DWP include:

• recovering overpayments

• repaying universal credit advances and social fund loans

Deductions for debts owed to third parties include:

• rent arrears to the claimant's current landlord

• fuel costs

• water charges

• council tax arrears

• magistrates' court fines

• child maintenance

• refugee integration loans

Amount which is deducted

Different types of debt have their own rules about how much can be deducted. In most cases the total combined deductions made from universal credit to recover debts are capped at 15 percent of the standard allowance.

The standard allowance is the initial sum of money all universal credit claimant's get based on whether they are claiming as a single person or couple. A claimant can find their standard allowance in their universal credit statements and online journal.

The 15 percent limit comes from DWP policy, not legislation. The DWP can authorise deductions above 15 percent in special cases, such as where it is necessary as a last resort to prevent eviction or disconnection of utilities.

This cap does not include money the DWP pays directly to the claimant's landlord or energy company to cover a client's current rent or fuel costs for that assessment period.

Managed payments to landlords

A claimant's landlord or their work coach can apply to have the housing costs element of universal credit paid directly to the landlord.

The claimant can also request this by talking to their work coach or case manager, or requesting this online or over the phone. In DWP policies this is known as a type of Alternative Payment Arrangement (APA) called a Managed Payment to Landlord (MPTL).

The DWP sets out the circumstances where it will consider a managed payment in section 2 of their guidance on Alternative Payment Arrangements. One common circumstance is where the landlord applies after the claimant has rent arrears of 2 months or more, but there are other factors the DWP can consider.

Notifying the claimant before a managed payment

The DWP should notify the claimant before they implement a managed payment to give them a chance to object, for example if they believe the landlord has supplied inaccurate information about rent arears or if there is an ongoing disrepair dispute.

The claimant normally has 7 days to register a complaint, and if a complaint is registered they will be given a further 7 days to provide the DWP with evidence.

Managed payments on UC statements

When a managed payment occurs, it will be noted as a deduction on the universal credit statement.

In this example, the DWP is awarding the claimant £407.14 in housing costs, but is deducting it from the award and giving it directly to the landlord. They have also put a warning on the statement noting that this will not cover the whole rent, so the claimant will have to pay the remainder themselves.

Managed payments and deductions for rent arrears

A managed payment is different from making deductions to pay off rent arrears, as it is about paying the benefit for the current rent directly to the landlord. A managed payment of the current rent and a deduction from the standard allowance to make payments towards rent arrears often run side by side.

More information

Find out more about deductions for debts for the public and for professionals.

Guidance for clients

Read the government guidance about money taken off your universal credit payment at Gov.uk.

Find out more about universal credit deductions and how they are calculated on the Shelter website.

Find out more about managed payments to landlords on Shelter Legal.

Guidance for professionals

Professionals can find more information on how deductions for debts are calculated as well as more focused information on deductions for rent arrears and deductions for fuel costs on Shelter Legal.

The DWP provide detailed guidance for decision makers in their Advice for Decision Making. Chapter D2 deals with deductions from benefits for debts. Read chapter D2 of the guidance at Gov.uk.

The DWP provide extensive guidance on how managed payments of housing costs to landlords work in the "paying rent" section of their guide for landlords. Read the universal credit and rented housing guide for landlords at Gov.uk.

Read more about alternative payment arrangements where universal credit is paid to other people or at unusual intervals at Gov.uk.