Currently 5.2 million households in the UK are drawing universal loans from the Department for Work and Pensions (DWP), the equivalent of approximately 5.9 million people receiving regular benefits to cover the costs of daily living.
And while much of the focus right now is on removing the £ 20-per-week Universal Loan top-up that has been in place since March 2020 and provides over £ 1,500 extra income, many applicants may not be aware that There are also several reasons why the DWP might be deducting money from your monthly payment.
Put simply, you can deduct money from your benefit payment when you have a debt.
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However, applicants can see this on their Universal Credit statement. To find your bank statement, log into your online account, go to “Payments” and look for “What We Deduct – Deductions” on your bank statement.
However, if you are wondering what types of debts can be collected from your Universal Credit payment, we have detailed them below. However, full instructions can be found on the GOV.UK website here.
Types of Debt
1. Prepayments
This is your universal loan advance repayment.
2. Overpayment of the universal credit
This is the case when too much universal loan has been paid out to you. To find out more about your overpayment, log into your online Universal Credit account, go to your journal, and look for an overpayment message.
Adds DWP Guide, “If you think you have paid too much but haven’t heard of Universal Credit, you need to contact Universal Credit to let them know.”
3. Overpayment of services
This is the case if you have been overpaid for services other than the universal loan. It includes tax credits and overpayments for housing benefits.
DWP warns that penalties can be added to overpayment.
It said: “If you think you have paid too much but have not heard from DWP, you must report it immediately. If not, you may face criminal prosecution or pay a fine. “
If you paid too much, you will receive a journal message or letter explaining what the overpayment is for.
4. Refundable hardship benefit
You can apply for a hardship payment if your universal loan payment has been reduced due to a fraud penalty or sanction.
You will need to repay this amount once your fraud penalty or penalty has expired. DWP declares that “once the amount that you will repay has been agreed, it cannot be changed”.
5. Budgeting and repayment of crisis loans
This is your household or crisis loan repayment. How much you will repay is agreed upon when the loan is accepted.
Other debts you owe
These are known as third party deductions and are deducted from your universal loan to pay off other debts.
These include:
6. Utilities such as electricity, gas and water
7. Council tax
8. Child support
9. Rent
10. Service Fees
11. Fines in court
It is important to understand that only three third party prints can be made at a time.
Universal Credit will send you a message in your online journal when a third party withdrawal begins.
How much is deducted from your Universal Credit payment?
Universal Credit calculates the amount deducted from your payment at the end of each evaluation period – a calendar month.
The amount deducted may change if you:
- Change in result
- Change other benefits
The DWP instructions explain, “It is not possible to tell you how much is being consumed before this calculation takes place.
“Typically, a maximum of 25% of your Universal Credit Standard Allowance can be deducted from your payment.”
This is the base amount that you are due before paying for things like childcare and housing costs.
You may be deducted more than 25% of your standard allowance if you pay a last resort deduction.
A “last resort” penalty will help keep you from being evicted or cut off your utilities. It is paid directly to the person or organization to whom you owe money.
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What To Do If You Are Having Difficulty Paying Back Your Debt?
If you are having difficulty, you can apply for a financial hardship decision to reduce the amount of benefit debt you have paid.
You can be considered for this if you have withdrawn money from your universal balance for:
- Performance debts
- Budgeting of loans and crisis loans
- Progress
- Rent arrears – if deducted at a rate greater than 10% of the standard flat rate
If it is decided to reduce the amount you paid, it will automatically be applied to your next Universal Credits evaluation period.
Find out who to contact about withdrawing money from your Universal Loan payment on the GOV.UK website.
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