Six Reasons Universal Credit Payments May Be Cut Amid Warning Issued

Universal Credit becomes the primary payment to help cover living costs as it slowly replaces six other benefits.

Six million UK households are currently claiming Universal Credit and calculating your claim can be confusing as it depends on the circumstances of the claimant.

Factors that determine payments include living conditions, employment, income and savings.

As these circumstances are assessed monthly, Universal Credit payments may fluctuate.

However, there are specific reasons why payments could be reduced or even stopped temporarily – and it is important to be aware of these to allow planning for changes in payments.

To help clear things up, the mirror explained the six reasons below…

1. You earned more money from work

If you are employed, the amount of Universal Credit you will receive each month will depend on your income.

For every £1 you win, your payout is reduced by 55 pence – this is called the reduction rate.

In short, the more you earn from your job, the less Universal Credit you will receive.

Some people are entitled to work allowance, which is a fixed amount you can earn before your benefits start to be reduced.

You will be entitled to work allowance if:

If you are on help with accommodation costs your work allowance is £344, or if you are not on help work allowance is £573.

2. You reported a change in circumstances

Certain life events and changes in circumstances will also affect your Universal Credit payments.

For example, moving house, finding a job, or if you recently inherited money. Not all changes in circumstances will reduce your Universal Credit – some may actually increase your payments.

It is important to notify Universal Credit of any changes as soon as possible so that you are not overpaid or underpaid.

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Changes listed online that Universal Credit expects you to tell them about include:

  • Find or complete a job

  • have a child

  • Moving in with your partner

  • Starting to take care of a child or a disabled person

  • Changing your mobile phone number or email address

  • Moving to a new address

  • Changing your bank details

  • Your rent goes up or down

  • Changes in your health status

  • Becoming too sick to work or meet your work coach

  • Changes to your income (only if you are self-employed)

  • Changes to your savings, investments and how much money you have

  • Changes to your immigration status, if you are not a UK citizen

3. You owe Universal Credit money

If you purchased a prepayment, hardship payment, or budget advance, this will come out of your future Universal Credit payments.

That’s because they’re technically loans, so they have to be repaid.

An advance payment is a sum of money given to new Universal Credit applicants to help cover their bills while they wait for their application to be processed.

A budget advance is normally given for one-time and unexpected payments, such as home repairs or a uniform for a new job, while a hardship allowance is given to those who have been disciplined and are experiencing hardship.

How long you will have to repay these payments depends on the amount you borrowed.

4. You have been sanctioned by the DWP

When you sign up for Universal Credit, you’ll usually have to agree to do certain things, like look for work and attend JobCentre interviews.

If you fail to complete the tasks you signed up for, you will be disciplined and your salary reduced.

There are four sanction levels, each determining the length of your sanction:

The lowest tier applies if you only need to meet the work-based interview requirement and you do not show up or participate in a work-based interview. It lasts until you participate in one.

For the higher penalty, you will be sanctioned for 91 days for your first higher level sanction and 182 days for your second and each subsequent higher level sanction within a 364 day period.

The DWP will tell you what type of penalty you received and how much your money is reduced.

You can appeal a penalty if you believe you have been unfairly penalized. This is called a mandatory review.

5. You were paid too much Universal Credit

If the Department for Work and Pensions (DWP) has paid you too much Universal Credit, it will take back the money from your future payments.

You can ask if they allow you to waive the overpayment – but they don’t have to say yes.

This is called “exercising their discretion not to recover an overpayment” and is at the discretion of the DWP.

You can report an overpayment by sign in to your Universal Credit account or by calling the Universal Credit Helpline.

6. You repay a debt

If you are in debt, for example, you are behind on your rent or you owe money to your energy supplier, you may see a “third party deduction” applied to your universal credit.

You will only get a deduction if the creditor requests the DWP and is usually 5% of your basic standard allowance, although it could be more.

Deductions can only be made for:

  • Arrears of rent and other housing costs like service charges – the deduction can be between 10% and 20% for arrears of rent
  • Gas, electricity or water arrears
  • Municipal tax account arrears
  • Maintenance of child support
  • Certain loans
  • Some fines

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