ONE million families on Universal Credit are set to get a £420 boost as part of the Chancellor’s Autumn Budget.
Rachel Reeves has confirmed she will lower the cap on the maximum level of deductions that can be taken from a person’s benefit payments.
Rachel Reeves confirmed the rise in her budget today.[/caption]
The Department for Work and Pensions can deduct money from a Universal Credit claimant’s allowance to help them pay back debt.
These can cover a range of debts, such as benefit advances, overpayments of child tax credits, rent and council tax areas, as well as outstanding water and utility bills.
Under previous rules, the DWP and third parties could deduct up to 25% of a claimant’s standard allowance to help manage their debt repayments.
But this has now been capped at 15% in efforts to help some of the worse-off homes across the UK pay off what they owe over a longer period.
The measure known as the Fair Repayment Rate will come into effect next April.
Government hope the move, which will target some of the worse-off families across Britain, will help head off criticism over decisions to means-test the £300 Winter Fuel Payment and keep the two-child benefit cap.
TYPES OF UNIVERSAL CREDIT DEDUCTIONS
There are a number of reasons why the Department for Work and Pensions (DWP) will deduct money from your Universal Credit allowance to help pay off any debts.
Conor Lawlor, benefits expert at Turn2us, says: “These debts can accrue in several ways, including for Universal Credit and other benefit overpayments (even if the overpayment was made in error by DWP), benefit advances and recovering hardship payments.
“The DWP can also deduct on behalf of third parties if a claimant is in debt to them, including for rent and service charge arrears, council tax arrears, court fines, child maintenance, and for utilities like electricity, gas and water.”
However, it’s important to note that not every deduction is compulsory, and some are voluntary.
Here are the six main forms of deductions you could be affected by…
1. ADVANCE PAYMENTS
One of the most common reasons for a Universal Credit deduction is because a claimant applied for advance payments.
When you make a new claim for Universal Credit, you will normally receive your first payment seven days after the end of your first assessment period (four weeks) – this is known as the “five-week wait”.
You can apply for an advance payment of your Universal Credit if you are in financial hardship while you wait for your first payment, for example, if you can’t afford to pay your rent or buy food.
However, as this is a loan, you will be expected to pay it back.
The first deduction is made on the day you get your first payment.
You must usually pay back the advance within:
- 24 months if you apply for the advance if you’ve made a new claim for Universal Credit
- Six months if you apply for the advance because of a change of circumstances
2. BUDGETING ADVANCE
The budgeting advance should not be confused with an advance payment.
Instead, this is an interest-free loan that can be used to cover certain expenses like household furniture, equipment, and clothing.
What you get will depend on how much you need.
The smallest amount you can borrow is £100. You can get up to:
- £348 if you’re single
- £464 if you’re part of a couple
- £812 if you have children
The budgeting loan repayments will be taken automatically from your benefits.
The amount you repay is based on your income.
A budgeting advance should normally be repaid within one year, but this is extendable to 18 months in exceptional circumstances.
WATCH RACHEL REEVES ON NEVER MIND THE BALLOTS
By Ryan Sabey, Deputy Political Editor
RACHEL Reeves will be grilled in a special Budget edition of The Sun’s Never Mind The Ballots show today.
Our Political Editor Harry Cole will put the Chancellor on the spot shortly after she’s finished delivering her crucial address in the House of Commons.
It will be available to watch on thesun.co.uk, YouTube and Sun social channels at 5.30pm.
Topics will include her decision on whether to spare motorists a fuel duty rise, and the expected eye-watering tax rises she will impose.
Since its launch earlier this year, NMTB has cemented its place at the heart of British politics.
During the General Election campaign The Sun was the only print publisher to host back-to-back grillings of Rishi Sunak and Sir Keir Starmer.
Footage from The Election Showdown has been viewed over 15 million times.
NMTB has also featured interviews with ex-PMs Boris Johnson and Liz Truss, as well as senior politicians Nigel Farage, James Cleverly, Wes Streeting, Steve Reed and Bridget Phillipson
3. UNIVERSAL CREDIT OVERPAYMENTS
If you’ve been paid too much Universal Credit you’ll accure an overpayment.
To learn more about an overpayment, sign into your online Universal Credit account, go to your journal, and look for a message about overpayments.
If money is being deducted from your Universal Credit to pay back the overpayment, the amount deducted depends on your circumstances.
If you are receiving Universal Credit and have no earned income, the maximum amount that can be deducted from your Universal Credit for overpayments is 15% of your standard allowance.
If you are receiving Universal Credit and have some earned income, the maximum amount that can be deducted from your Universal Credit for overpayments is 25% of your standard allowance.
4. TAX CREDIT OVERPAYMENTS
If you are getting tax credits and you claim Universal Credit, HMRC will be told to stop your tax credits.
However, 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.
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.
5. FRAUD AND SANCTIONS
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 or sanction will reduce your Universal Credit standard allowance.
This can be up to 100% of your standard allowance if you are single, or up to 50% 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.
6. THIRD-PARTY DEDUCTIONS
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 (Fuel Direct).
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
Only three third-party deductions can be taken at any one time.
Universal Credit will send you a message in your online journal when a third-party deduction starts.
Third-party deductions are fixed at 5% of your Universal Credit standard allowance for each third party.
However, for rent, deductions are fixed between 10% and 20%.
Unlike the other non-voluntary deductions listed above, claimants can initiate deductions for certain bills to help better manage their costs.
For example, you can contact your energy supplier to set up deductions for your ongoing bills through the Fuel Direct scheme.
Are you missing out on benefits?
YOU can use a benefits calculator to help check that you are not missing out on money you are entitled to
Charity Turn2Us’ benefits calculator works out what you could get.
Entitledto’s free calculator determines whether you qualify for various benefits, tax credit and Universal Credit.
MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto’s data.
You can use Policy in Practice’s calculator to determine which benefits you could receive and how much cash you’ll have left over each month after paying for housing costs.
Your exact entitlement will only be clear when you make a claim, but calculators can indicate what you might be eligible for.
