Over a million families on Universal Credit to get £420 boost TODAY – check if you get the benefit

UNIVERSAL Credit claimants will get a £420 increase in benefits payments as changes are introduced today.

The Department for Work and Pensions (DWP) announced a change to the Fair Repayment Rate that is coming into effect today.

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It caps the amount that can be deducted from an individual's benefits payments each month to pay housing costs, short-term loans and debts.

Previously, ongoing rent costs and arrears were processed and deducted automatically by the DWP's system through the existing Alternative Payment Arrangement.

It covers a range of payments from benefit advances, historical over-payments of child tax credits, rent, council tax, as well as outstanding water and utility bills.

The money is taken out of a claimant's Universal Credit standard allowance without notice each month, until the debt is fully repaid.

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However, a court ruling earlier in the year deemed the practice unlawful as many impacted were struggling, which came on top of the government's cuts to the winter fuel allowance.

By dropping the Fair Repayment Rate from 25 per cent to 15 per cent, around 1.2 million households among the poorest around the UK are expected to benefit.

A boost of around £35 a month or up to £420 a year could be claimed by households, including 700,000 with children.

Universal Credit deductions of over 25 per cent will remain if they are related to fraud penalties or sanctions.

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TYPES OF UNIVERSAL CREDIT DEDUCTIONS

There are a number of reasons money is deducted from Universal Credit allowances by the DWP to help pay of debts.

Benefits expert at Turn2us, Conor Lawlord, said: "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."

Not every deduction is compulsory, however, with some voluntary.

There are six main forms of deductions:

1. ADVANCE PAYMENTS

Some Universal Credit claimants may apply for an advance payment when first signing up.

This is due to the delay in payment after starting a claim and being assessed for Universal Credit, known as the "five-week wait".

The first payment usually comes a week after the end of your first assessment, but those in particularly financial hardship cannot afford to wait this long.

Individuals struggling to pay for rent or food are therefore given an advance loan, which is expected to be paid back either within 24 months for a new claim, of six months in the case of a changing in circumstances.

2. BUDGET ADVANCE

The Budget Advance is an interest-free loan that can be used to cover certain expenses for things like household furniture, equipment and clothing.

The smallest amount that can be borrowed is £100, which changes dependent on circumstances and how much you need.

You can get up to:

• £348 if you’re single
• £464 if you’re part of a couple
• £812 if you have children

Repayments for budget loans are taken automatically from benefits, and the amount you repay is based on income.

They should normally be repaid within a year, but is extendable by 18 months in exceptional circumstances.

3. UNIVERSAL CREDIT OVERPAYMENTS

Overpayments accrue if you have been paid more Universal Credit than entitled to.

They generally have to repaid, even if the overpayment was not your fault.

Repayments are typically deducted at a maximum rate of 15 per cent from the monthly standard allowance if not receiving earned income.

The maximum rate that can be deducted from Universal Credit for overpayments with some earned income is 25 per cent.

4. TAX CREDIT OVERPAYMENTS

HMRC will be told to stop tax credits if you claim Universal Credit.

Therefore, if you receive tax credits after having made a Universal Credit claim, you would be overpaid in tax credits.

Any tax credit over-payments will subsequently be taken out of Universal Credit payments.

5. FRAUD AND SANCTIONS

Deliberately not providing details about a change in circumstances for Universal Credit payments or giving false information is considered fraud.

A fraud penalty or sanction will reduce your Universal Credit standard allowance.

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. 

6. THIRD-PARTY DEDUCTIONS

A third-party deduction is an amount taken from Universal Credit allowance and paid directly to a person or organisation who you owe money to.

They can be taken without permission, to pay for things like housing costs, unpaid rates, or child maintenance, as well as to landlords or electricity suppliers.

Only three third-party dedcations can be taken at a time.

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They are fixed at five per cent of the Universal Credit standard allowance.

Rent deductions are fixed between 10 and 20 per cent.

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