Six types of debt DWP can take from your benefit

The DWP holds a comprehensive list of debts that can result in your Universal Credit benefit being cut, with 3.3 million households affected by deductions

Universal Credit claimants may discover funds removed from their payments through ‘deductions’ to settle various outstanding debts. The sums taken can be redirected to the DWP, to creditors, or even straight to your landlord.

Recent Department for Work and Pensions statistics showed that 3.3 million households claiming 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 reduced in this manner at some stage, representing an increase of 300,000 claimants over the past 12 months.

The DWP also maintains a detailed list of the debt categories that can lead to your benefit being reduced. However, deductions are typically capped at 15 per cent of your standard allowance to stop claimants from sliding into greater 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

Most of these loan, hardship and overpayments are returned to the DWP. Deductions directed towards other individuals or organisations fall under third party deductions, reports Wales Online.

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 from your account at any single time. You will be informed in advance when a third party deduction is due to commence.

Should your landlord request a deduction to cover rent arrears or service charge debts, you have just seven days to notify 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 applied.

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 count towards this total.

Official DWP guidance states 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 the vast majority of cases, deductions are capped at a maximum of 15 percent of your standard allowance. However, this percentage can increase if you are subject to 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