Deduction priority order
Deductions can be taken from monthly Universal credit payments for a number of reasons.
If there is insufficient benefit to take all the deductions due from your payments or if the total monthly deductions due would exceed 25% of your standard allowance, a priority order will apply.
Deductions for payments higher up the priority list will be taken before those lower down. Once you clear a payment, if you have other payments to make, deductions lower down the priority will be applied to your claim.
Some of the deductions are referred to by the DWP as ’last resort deductions’ these are made when claimants are at risk of becoming homeless or having fuel supplies cut off.
Other deductions are made to ‘enforce social obligation’ these are made when other repayment methods have failed or are not cost effective. They could be court imposed. They could also be to maintain extended families in the case of maintenance payments or to recover certain third-party loans.
Deductions are also made to ‘ensure benefit debt is recovered in a cost-effective manner’.
The DWP states that ‘a balance needs to be maintained between the possible increase in the recovery of government debt against not causing hardship for claimants and their families’.
It also says that ‘care must also be taken to ensure that a debt recovery doesn’t act as a disincentive for moving into work’.
When the priority order is applied as many deductions as possible are taken from your monthly payment.
When the priority order applies
The priority order is applied if:
- you are not getting enough Universal Credit to pay all the deductions due on your claim
- your total deductions would exceed 25% of your standard allowance
If you have 2 deductions on the same level of the priority order, the amount that can be taken for that type of deduction will be split equally between the two liabilities.
Priority order
1. Fraud penalties.
2. Conditionality sanctions.
3. Advance repayments - new claim or change of circumstance.
4. Advance repayments – benefit transfer.
5. Budgeting advance repayments.
Last resort deductions
6. Mortgage interest arrears.
7. Owner-occupier service charge arrears.
8. Rent and/or service charge arrears (if the deduction rate is 10% of the standard allowance).
9. Gas arrears.
10. Electricity arrears.
Enforcing social obligation
11. Council tax arrears.
12. Fines or compensation orders (if the deduction rate is 5% of the standard allowance);
13. Water charge arrears.
14. Old scheme Child Maintenance 1993 rules.
15. Flat Rate Maintenance 2003 or 2012 rules.
Ensuring recovery of benefit debt
16. Social fund loans.
17. Recoverable hardship payments.
18. Housing benefit and DWP administrative penalties.
19. Housing benefit, Tax credit and DWP fraud overpayments.
20. Housing benefit and DWP civil penalties.
21. Housing benefit and DWP normal overpayments.
Enforcing social obligation
22. Integration loan arrears.
23. Eligible loan arrears.
24. Rent and/or service charge arrears (if the deduction rate is more than 10% of the standard allowance).
25. Fines or compensation orders (if the deduction rate is more than 5% of the standard allowance).
Rates of deduction
Maximum rates of deduction
There are maximum or set deduction rates for each item on the list. Currently the total maximum rate of deduction is 25% of the standard allowance.
| Claimant | Maximum deduction |
|---|---|
| Under 25 | £265.31 |
| 25 and over | £334.91 |
| Joint claimants under 25 | £416.45 |
| Joint claimants one or both 25 or over | £525.72 |
The Universal Credit work allowance
Work allowances are only applied to claims where you (or your partner) have ‘limited capability for work’ or are responsible for a child or qualifying young person.
If the amount you (and your partner) earn is more than the Universal Credit work allowance, deductions may change. In some circumstances, deductions will end because you have sufficient income to make payments towards your debt on your own. In other situations, deductions may be taken at a higher rate, using your additional income to clear the debt or arrears more quickly.
There is a higher work allowance if you do not have housing costs included in your Universal Credit calculation. This applies to most homeowners as you cannot receive Universal Credit to help with your mortgage. It also includes non-dependents who are living with close relatives and cannot claim Universal Credit to help with rent where they are entitled to a work allowance.
| Work allowance | Amount |
|---|---|
| Lower work allowance - if you have housing costs included in Universal Credit | £344 per month |
| Higher work allowance – if you do not have housing costs included in Universal Credit | £573 per month |
Only one work allowance applies per household even if both members of a couple are earning.
Conditionality and your earnings threshold
Your work coach should agree an earnings threshold with you at the start of your Universal Credit claim or when you have a relevant change of circumstances.
It forms part of your claimant commitment.
The threshold is a weekly or monthly pay threshold. If you earn enough to reach your threshold, you will no longer be affected by the conditionality rules for claiming Universal Credit. This means you no longer have to seek or be available for work or undertake any work focused interviews or activity. This threshold will be the minimum wage for your age group multiplied by an agreed number of hours of weekly work.
Currently, ‘in work conditionality’ where the claimant commitment requires part-time workers to look for more or better paid work until they reach their earnings threshold is not being applied to claimants. However, your earnings threshold may still affect certain types of deduction.
Exceptions to the maximum deduction rate
You can have amounts deducted for arrears of fuel or water and your ongoing bills at the same time. The amounts deducted for your ongoing consumption will not count towards the 25% maximum amount.
A deduction for any of the first five items on the priority list above; a sanction, advance or fraud penalty, can be applied in addition to any deductions for ‘last resort’ (items 6-10 on the list) even if this means the total deductions exceed the 25% maximum.
Where a percentage of your standard allowance results in a fraction of a penny it will only be included in the deduction if the fraction is half or more in which case it is treated as a penny.
Deductions cannot leave you with less than a penny of Universal Credit, meaning that they cannot remove your entitlement to Universal Credit entirely.
Court fines and a recent court ruling
Regulation of the Fines (Deductions from Income Support) Regulations 1992 provides for discretion in the amount that can be deducted from universal credit in respect of a court fine between a minimum of 5 per cent of the standard allowance and a maximum of £108.35. However, the High Court ruled in March 2021 that the DWP’s universal credit deductions policy of applying a rigid formula to deduct the maximum amount possible is unlawful.
The government has amended its Benefit Overpayment recovery Staff Guide to reflect the new 5 per cent recovery rate policy for fines (at Appendix 4 - Priority of Deductions from Universal Credit).
Deduction rates for Universal Credit
Sanction, high, medium, low – daily rates
100% loss of personal allowance/half couple allowance
Claimant type | Rate of deduction |
|---|---|
| Under 25 Single | £8.70 per day |
| 25+ Single | £11.00 per day |
| Under 25 couple (per sanctioned claimant) | £6.80 per day |
| 25+ couple (per sanctioned claimant) | £8.60 per day |
Sanction lowest – daily rates
40% loss of personal allowance
| Claimant type | Rate of deduction |
|---|---|
| Under 25 Single | £3.40 per day |
| 25+ Single | £4.40 per day |
| Couple, both under 25 (per sanctioned claimant) | £2.70 per day |
| Couple, one or both 25+ (per sanctioned claimant) | £3.40 per day |
Third party deductions, except for rent and service charge arrears and court fines
5% of standard allowance
| Claimant type | Rate of deduction |
|---|---|
| Under 25 Single | £13.27 per month |
| 25+ Single | £16.75 per month |
| Couple both under 25 couple | £20.82 per month |
| Couple, one or both 25+ | £26.29 per month |
Maximum deduction for fines
£108.35 per month
Rent and service charge arrears minimum/maximum deduction
10% of standard allowance/20% of standard allowance
| Claimant type | Rate of deduction |
|---|---|
| Under 25 Single | £34.40/£68.80 per month |
| 25+ Single | £41.15/£82.30 per month |
| Couple both under 25 couple | £49.06/£98.12 per month |
| Couple, one or both 25+ | £59.66/£119.32 per month |
Overall maximum deduction rate including fraud overpayments, recoverable hardship payments and administrative penalties
25% standard allowance
| Claimant type | Rate of deduction |
|---|---|
| Under 25 Single | £66.33 per month |
| 25+ Single | £83.73 per month |
| Couple both under 25 couple | £104.11 per month |
| Couple, one or both 25+ | £131.43 per month |
Ordinary overpayments and civil penalties
15% of standard allowance
| Claimant type | Rate of deduction |
|---|---|
| Under 25 Single | £39.80 per month |
| 25+ Single | £50.24 per month |
| Couple both under 25 couple | £62.47 per month |
| Couple, one or both 25+ | £78.86 per month |
Ordinary overpayments and civil penalties where earnings are above the work allowance
25% of standard allowance
| Claimant type | Rate of deduction |
|---|---|
| Under 25 Single | £66.33 per month |
| 25+ Single | £83.73 per month |
| Couple both Under 25 couple | £104.11 per month |
| Couple, one or both 25+ | £131.43 per month |
Contact DWP Debt Management Team
If you are struggling to pay the debt, you should contact the Debt Management Team.
You can phone them on 0800 916 0647
Or you can write to them:
Debt Management (C)
Mail Handling Site A
Wolverhampton
WV98 2DF
If you disagree about whether you owe the money
If you disagree that you owe the money, you can contact DWP and ask them to explain the debt.
Debt Management may be able to tell you about the history of the debt. If you have not received notification from DWP about the debt and you think it is wrong, you can contact them and ask for a copy of the notification so that you can check it is right and get advice.
Contact our Welfare Rights Team
You can:
- send an email to welfarerights@ brighton-hove.gov.uk
- write to Revenues and Benefits, Brighton & Hove City Council, 1st Floor Bartholomew House, Bartholomew, Square, Brighton, BN1 1JE
- phone the advice line on 01273 291 116, open Monday, Tuesday, Wednesday, 10am to 1pm