Money taken from your Universal Credit payments

When money can be taken from your Universal Credit payments

Money can be taken from your Universal Credit payments if you:

• have had a Universal Credit advance loan or budgeting advance loan
• have had a hardship payment 
• have had a fraud penalty 
• have had a sanction 
• owe money to third-party suppliers, for example, your gas or electricity suppliers, called a Third Party Deduction / Last Resort Deduction 
• have benefit debt or have received overpayments
• have been paid too much Tax Credit

Who to contact depends on what type of query you have. Find out who to contact

Benefit debt

Benefit debt is an over-payment of government benefits or tax credits, loans or advances that you have to pay back.

Benefit debt includes the following.

• Social Fund loans
• Hardship payments
• Advance loan of benefits
• Administrative penalties (a penalty you receive instead of being prosecuted to recover an overpayment)
• Tax Credit overpayments
• Housing Benefit overpayments
• Fraud penalties
• Benefit overpayments

Repaying a Universal Credit Advance loan

A Universal Credit Advance is a loan to help support you while you are waiting for your Universal Credit payments.

You will need to repay the Advance loan within the following timescales: 

• repay within 24 months an Advance following a new claim or transferring from another benefit (Universal Credit may agree to extend this deadline by up to three months if you are struggling with money)
• repay within six months a Change of Circumstances Advance (Universal Credit may agree to extend this deadline by up to three months if you are struggling with money)
• repay within 12 months a Budgeting Advance (Universal Credit may agree to extend this deadline by six months if you are struggling with money)

The repayments taken out of your Universal Credit payments will be up to 25 per cent of your Standard Allowance (the basic amount of Universal Credit you are entitled to, before extra money for things like childcare and housing costs is added).

If you have more than one Advance loan to pay back, repayments will be taken from your Universal Credit payments in the order given. You can check the balance of any Advance you owe through your Universal Credit online account.

If a fraud penalty or sanction is applied to your Universal Credit payments, advance repayments will be stopped until the fraud penalty or sanction ends.  You will start to pay back the Advance loan once your fraud penalty or sanction has ended.

Repaying a Hardship payment

You may have got a hardship payment if your Universal Credit payments were reduced because you had a fraud penalty or sanction applied to them and you could not meet your and your family’s basic needs.

You will start to repay the hardship payment once your fraud penalty or sanction has ended.

If you are repaying a hardship payment and find you cannot afford the repayments you should tell Universal Credit. If you have a Universal Credit Advance loan being deducted, a deferral will be considered.

You will then be able to speak to Debt Management to have an affordability discussion about your Recoverable Hardship payments and/or other benefit debts and Social Fund loans.

Your hardship repayments can be suspended for any assessment period where your earnings have reached a level at least equal to the Conditionality Earnings Threshold.

The conditionality earnings threshold is when your earnings have reached a level where you do not have to carry out any work-related activity (in other words, you are earning enough).  If you are part of a joint claim, this will be if you and your partner’s total earnings reach the conditionality earnings threshold for couples.

If your earnings, or in the case of a couple, both your earnings together stay at this level or above the threshold for at least six assessment periods (after the last fraud penalty or sanction was applied), Universal Credit may not ask you to repay the remaining hardship payment.

Fraud Penalty or a Sanction

If you deliberately do not provide details about a change in your circumstances that could affect your Universal Credit payments, or you give false information, this is fraud. A fraud penalty can be applied to your Universal Credit payments to reduce the amount you receive.

If you don’t do the things you agreed in your Universal Credit Commitment, your Universal Credit payments may be reduced for a set period. This is known as a sanction.

A fraud penalty or sanction will reduce your Universal Credit Standard Allowance (the basic amount of Universal Credit you are entitled to before extra money for things like childcare and housing costs is added). This can be up to 100 per cent of your standard allowance if you are single, or up to 50 per cent for each person in a joint claim.

If a fraud penalty or sanction is being taken from your Universal Credit payments, no other repayment or deduction will be taken, except for last resort deductions. 

You will only pay one fraud penalty or one sanction at a time. If you are part of a joint claim, both of you can have a fraud penalty or sanction applied to your Universal Credit payments at the same time.

If both a fraud penalty and a sanction are applied to your Universal Credit payments, the fraud penalty will take priority and be paid off first.

If you suffer financial hardship because of a sanction, you may be entitled to a hardship payment. For more details, contact your local Jobs and Benefits office, your adviser or work coach.

You can find more useful information on Universal Credit Sanctions

Third Party Deduction

A third-party deduction is an amount that is taken from your Universal Credit payments and paid direct to the person or organisation you owe money to, such as your landlord or your gas or electricity supplier.

Third party deductions can also be taken, without your permission, for things like:

• housing costs (for example, rent arrears for your current address)
• unpaid rates
• child maintenance

Some deductions can be made for ongoing costs, not just overdue amounts.

Third party deductions are fixed at five per cent of your Universal Credit Standard Allowance for each third party. This fixed amount cannot be changed.

• no more than three third party deductions can be taken at any one time
•  your online account will show when a third party deduction will start 

Last Resort Deduction

A Last Resort Deduction is a type of third party deduction taken from your Universal Credit payments because you owe money for:

• rent
• service charges for a home you live in 
• gas or electricity

Last resort deductions are made to help prevent you from being evicted or having your gas or electricity cut off.  This money will be paid directly to the third party that you owe money to.

Over-payments

An over-payment is an amount which has been paid to you that you were not entitled to.

You will pay back any over-payments at a rate of up to 15 per cent of your Standard Allowance (the basic amount of Universal Credit you are entitled to before extra money for things like childcare and housing costs is added).

If your household earnings are above a certain level, up to 25 per cent can be taken from your Universal Credit payments. You can speak to your work coach at your local Jobs & Benefits office to find out more.

Over-payments of Tax Credits

If you are getting tax credits and you claim Universal Credit, HM Revenue & Customs (HMRC) will be told to stop your tax credits. If you receive tax credits after you have made your claim to Universal Credit this could result in you being paid too much tax credits. Universal Credit will take action to get this money back as well as any other tax credit over-payments you have.

When you move to Universal Credit, HMRC will send you a letter called ‘Your Tax Credits over-payments’ (TC1131). This will tell you about any tax credit repayments that will be taken out of your Universal Credit payments. Different over-payments may be repaid from your Universal Credit payments at different times, and you may receive more than one letter.

If you claimed tax credits as a couple, the over-payments will be split equally between you and your partner.  If you want to find out how the over-payment has been worked out, contact HMRC:

• Helpline – 0345 300 3900
• You can also use NGT text relay if you cannot hear or speak on the phone: dial 18001 then 0345 300 3900

How much can be taken from your Universal Credit payments

Your Universal Credit payment is worked out at the end of each Assessment Period. Your Universal Credit online account will show a breakdown of each deduction taken from your Universal Credit payments.

The most that can be taken from your Universal Credit payments each month is 25 per cent of your Universal Credit Standard Allowance (the basic amount of Universal Credit you are entitled to, before extra money for things like childcare and housing costs is added) unless last resort deductions are being taken. 

If last resort deductions are being taken, your deductions may be more than 25 per cent of your Standard Allowance.

If you are part of a joint claim for Universal Credit, you and your partner will receive a joint Universal Credit payment for your household, paid twice a month.

If you or your partner have debts or deductions, these will be taken from your Universal Credit payments before you get them.

Reducing your deductions because of financial hardship

If you do not have enough money to live on because of deductions from your Universal Credit payments, you can ask for a ‘financial hardship decision’ to reduce your deductions.

A financial hardship decision will be considered if deductions are being taken from your Universal Credit payments for:

• repaying Tax Credit over-payments
• paying off benefit debt
• repaying a Social Fund loan

If a decision is made to reduce your deductions, the new reduced deductions will apply from the start of your next Universal Credit assessment period.

When you are earning enough money again, your deductions will go back up to the normal amount.

Consideration can also be given to deferring the recovery of a Universal Credit advance for 3 months.

Deductions taken first

If your total deductions would be more than 25 per cent of your Universal Credit Standard Allowance, deductions will be made in the following order of priority:

• fraud penalties
• sanctions
• Universal Credit advance loan after a new claim or change of circumstances
• Universal Credit advance loan after transferring from another benefit
• budgeting advance loan

Any other deductions will be taken in the following order of priority:

• housing costs
• rent or service charges included in rent (at five per cent of your standard allowance)
• fuel arrears (gas and /or electricity)
• rates arrears
• fines and compensation orders
• water charges arrears
• child maintenance
• social fund loans
• hardship payments
• housing benefit and Department for Communities administrative penalties
• housing benefit, tax credit and Department for Communities fraud over-payments
• housing benefit, tax credit and Department for Communities normal over-payments
• integration loan arrears

If a new debt is a higher priority than an existing one, Universal Credit can stop one deduction and set up a new one.