Universal Credit and Pension Credit are among numerous financial lifelines for people in the UK. Yet, the Department for Work and Pensions (DWP) warns that claimants may face cuts worth between 5% and 20% in very exceptional circumstances.
The cuts, referred to as ‘third party deductions’, take place when a benefits claimant owes money for court fines, rent, Council Tax or energy payments. Usually, this deduction will be at a fixed amount until the debt or debts are paid off, with a maximum of three debts payable at once through this method.
If you’re receiving Universal Credit, 5% is deducted from your benefits payment for each debt owed, though for rent payments, it may be between 10% and 20%. Individuals receiving other benefits, such as income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA) and Income Support, may also see £4.55 a week cut for each debt owed.
The DWP’s list of those affected is below:
Third party deductions are usually requested on behalf of an organisation which is owed money from an individual. These are then approved by the DWP in exceptional circumstances where an organisation has exhausted other avenues to recover the owed funds.
“You’ll be told how much will be deducted by letter or in your Universal Credit journal,” the DWP’s advice explains. “…If you want to pay more than the fixed rate towards your debts, you must arrange this with the organisation you owe money to.”
Third party deductions for ‘fuel debt’ – owing money for gas and electricity – are more frequently referred to as Fuel Direct. Brits keen to pay off their ongoing bills can also contact a supplier to set up deductions that cover energy use.
The DWP continues: “Contact your supplier to set up deductions for your ongoing bills. They’ll need your consent to request this for you. You can give consent on the phone. It does not need to be in writing.
“Agree an amount with them that covers the cost of the energy you use. You can stop deductions for ongoing bills at any time. Contact the office that pays your benefit to request this.
“If you choose to stop making gas and electricity payments, contact your energy supplier to arrange a different way to pay. If you want to change the amount you pay, contact your supplier.
“If you owe money but cannot afford more deductions to your benefits, your supplier can tell you what help is available for people on low incomes. They may be able to arrange a different way for you to pay.”
However, if you disagree with the deductions made to your benefits, you can request for a mandatory reconsideration. You will need request this within one month of the monetary decision and must state a ‘good reason’ for it.
This may include the following instances:
“Some decisions cannot be reconsidered. Others can go straight to an appeal,” the DWP adds. “Your original decision letter will say if this applies to you.”
For further information, head to the DWP’s website.
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