The Department for Work and Pensions (DWP) has the authority to make direct deductions from Universal Credit payments to cover specific debts. This process, which can reduce a claimant's monthly payment, applies to individuals who are in arrears or have received an overpayment of benefits.
What Bills Can Be Covered by Universal Credit Deductions?
According to official DWP guidance, money can be taken from a standard Universal Credit payment to settle five main categories of debt. These include rent arrears and overpayments of other benefits such as tax credits, Housing Benefit, Employment and Support Allowance (ESA), and Jobseeker’s Allowance (JSA).
Furthermore, deductions can be made for council tax arrears, utility bill debts for electricity, gas, and water, and to cover legally mandated payments like child maintenance or court fines.
Which Parts of Your Payment Are Protected?
Importantly, not all elements of a claimant's Universal Credit award can be touched. The DWP explicitly states that money cannot be deducted from amounts allocated for specific needs. These protected elements include your child allowance, childcare costs, and the housing cost portion of your Universal Credit intended to cover current rent or mortgage interest.
New Powers and State Pension Exemption
This comes as the government moves forward with enhanced powers to recover debts. Last week, legislation that grants the DWP authority to deduct money directly from payslips and bank accounts overcame its final hurdles in the House of Lords and is set to become law.
However, there is a key exemption. Previous DWP minister Liz Kendall has assured that State Pension claimants are not at risk from these new bank account checks. Their income will remain protected from direct recovery for other benefit debts.
The DWP's broader strategy for moving households onto Universal Credit was detailed in its 'Completing the Move to UC' policy document, published in April 2022. Officials have cited an 'increasing propensity' for dishonesty in society as a factor behind rising fraud, prompting stricter measures.
