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welfare rights
Deductions made from benefits

People claiming welfare benefits may get a nasty surprise when claimant has to pay a “last resort
they are told money is going to be deducted from the amount deduction”. This is a deduction paid
directly to a landlord or utilities provider
they receive. Charlie Callanan explains how this happens to help prevent the claimant from being
evicted or having their utilities cut off.
Note there is some good news
eople can have money deducted as, from October this year, the normal
from their benefits for various overall maximum that can be deducted
Preasons. These include to pay off fuel from a claimant’s universal credit will be
arrears, to meet a continuing essential bill reduced from 30% to 25% of their
such as housing costs or to repay a benefit standard allowance.
advance or loan. A third-party deduction in universal
A survey regarding deductions by debt credit is usually made at a fixed rate of 5%
advice charity Step Change in 2017 found of the claimant’s standard allowance (the
that deductions caused hardship to 71% basic allowance before elements such as
of respondents and their families. the work capability amount and housing
However, they may still be made even if a costs are added). That is worth over £17
claimant is already struggling to maintain per month for a single person and about
basic living standards on a limited income. £20.50 for joint claimants.
There are limits to the number of However, rent arrears can be recovered
deductions that can be taken, as well as at a higher rate of 10%-20% of the
caps on the amounts and the proportion standard allowance.
of benefit that clients must pay. However, There are separate rules and rates for
if a client is liable for a debt, they have Being behind with paying for gas, electricity or the repayment of DWP debts. For
limited control over how much of their water can mean money is taken from benefits example, the repayment of a universal
income is taken or for what purpose it is credit budgeting advance must usually be
being taken. but only for certain things, specifically made over 12 months, while budgeting
A “third-party deduction” is a common council tax arrears, fines and child support loans, available in legacy benefits, can be
type of deduction that may be made maintenance arrears. repaid within 104 weeks.
from certain benefits. It can be made For benefits other than universal credit,
for the following: the amount that can be deducted for Deductions from benefits
l Rent and service charge arrears arrears, such as for rent or fuel, is £3.75
l Council tax arrears per week. The amount that can be might be the best option to
l Gas and electricity arrears deducted for continuing costs varies pay off debts and keep
l Water and sewerage payments depending on the item involved.
and arrears The rules about universal credit landlords or creditors happy
l Court fines and compensation deductions are different – most
payments. importantly, higher amounts can be taken
The Department of Work and Pensions from them than from legacy benefits. If a client is having difficulty with
(DWP) may also seek to take money from Deductions can be made for three repaying a DWP debt or in paying it off
benefits in addition to any third-party third-party deductions at any one time within the expected timescale, they
deductions. These could be to repay a and money can also be taken at the same should contact DWP Debt Management
benefit advance or a budgeting loan, pay time for child support payments or to ask for the repayment schedule to
a benefit sanction or return an Department for Work and Pensions debts, be revised.
overpayment of benefit. including benefit overpayments, hardship While people are unlikely to welcome
payments and advance payments. deductions being made from benefits,
Which benefits are affected? A lot of universal credit claimants have for many it might be the best option to
Deductions can be made from some of had a deduction made to their award pay off debts and keep landlords or
the older means-tested “legacy” benefits from the first payment. That is because creditors happy.
that are being replaced by universal many must apply for an advance payment There is some protection for clients in
credit, including income-related as, after making a claim, they have to wait the limits placed on the proportion of
employment and support allowance five weeks before they can get their first their benefit that can be taken.
(ESA), income support and income-based regular monthly payment. If your client is facing hardship due to
jobseeker’s allowance (JSA). Universal deductions, it is worth asking a welfare
credit and pension credit can also be Overall maximum benefits adviser to check whether there is
subject to deductions. In universal credit, an overall maximum scope to negotiate for lower amounts to
Christy Lawrance of the above benefits but is receiving be deducted. l DWP Debt Management: 0800 916
of 30% of the standard allowance can
Where a claimant is not getting one
be taken. n
An exception when the overall
0647; Relay UK: dial 18001 first;
contributory ESA or contribution-based
textphone: 0800 916 0651
JSA, payments may be taken from these,
maximum may be higher is where the
www.cl-initiatives.co.uk Community Living Vol 34 No 3 | Spring 2021 7