The Division for Work and Pensions has issued new particulars concerning the affect of the powers on Common Credit score claimants
Sir Stephen Timms has shared an replace with MPs on Common Credit score (Picture: Parliament TV)
The principles round Common Credit score deductions are within the highlight as extra claimants have seen cash deducted from their entitlement. New DWP figures reveal a complete of three.3 million households on Common Credit score had a number of deductions taken from their UC entitlement in February 2026, contemporary knowledge printed this week confirms.
Practically half – 46 per cent – of these receiving the profit are dealing with deductions. And the determine has elevated by 300,000 over the previous yr, the brand new report issued on Might 12 says. For brand new claimants, the problem of deductions might not be one thing they’re conversant in.
We use your sign-up to offer content material in methods you have consented to and to enhance our understanding of you. This may occasionally embody adverts from us and third events based mostly on our understanding. You’ll be able to unsubscribe at any time. Learn our Privateness Coverage
A “deduction” refers to a sum of cash faraway from the month-to-month UC entitlement quantity to scale back a debt owed to the federal government or one other organisation. Deductions are taken from the month-to-month UC entitlement after any changes have been utilized to replicate the family’s monetary circumstances, corresponding to earnings.
There are three principal classes of deduction:
- Advances – deductions taken in direction of repaying a UC advance fee. The 4 forms of UC advances are: new declare, profit switch, change of circumstances and budgeting
- Third Occasion Deductions (TPD) – deductions for cash owed by the UC family to organisations corresponding to vitality suppliers or landlords
- Authorities Deductions – deductions for cash owed to authorities organisations such because the DWP or HMRC
The sum deducted for every debt varies relying on the character of the debt and the mixture of money owed owed by the family. Within the majority of instances, the utmost quantity that might be deducted from a UC family was capped at 25% of the month-to-month UC customary allowance previous to June 2025, lowering to fifteen% from June 2025 onwards (following the introduction of the Honest Compensation Charge in April 2025).
The reason for the rise in deductions, in line with DWP officers, is that extra folks at the moment are claiming Common Credit score than 12 months in the past. Claimants on so-called legacy advantages – specifically Housing Profit, income-related Employment and Help Allowance (ESA) and income-based Jobseeker’s Allowance (JSA) – are being transferred to Common Credit score as the federal government overhauls the welfare system.
In response to homelessness charity Shelter, the utmost deductions from April 2026 differ in line with particular person circumstances. A single particular person below 25 faces a most deduction of £51 a month. For these aged over 25, that determine rises to a most of £64 a month.
The scenario differs for {couples}. The place each companions are below 25, the cap stands at £79 a month. Ought to both accomplice be aged 25 or over, the restrict will increase to £100 a month.
Common Credit score deductions – precedence order
The federal government states that deductions observe a strict precedence order, starting with advances, adopted by third-party money owed corresponding to lease and utility arrears, then authorities money owed together with social fund loans and tax credit score overpayments. Any deductions that might push the entire above the general cap are withheld till enough room exists throughout the cap. Consequently, for households carrying a number of debt varieties, deductions decrease down the precedence order usually tend to breach the cap and subsequently go uncollected.
Rightsnet reported in 2023 that greater than 2 million kids reside in households with a Common Credit score deduction. It additionally stated that over 900,000 households receiving common credit score are at present repaying a budgeting advance.
In an evaluation printed final yr by Coverage in Observe, using deductions got here below fireplace. It famous: “Deductions for debt repayments and sanctions routinely cut back the quantity households truly obtain, undermining monetary safety and pushing many households deeper into hardship.”These deductions do greater than decrease revenue ranges; they improve revenue volatility, making it tougher for low revenue households to finances and plan forward. This instability has far reaching penalties, notably for housing affordability and the danger of homelessness.
New info on Common Credit score has been issued (Picture: Getty)
“To actually perceive the affect of Common Credit score on poverty and monetary insecurity, policymakers should look past headline award charges and contemplate what folks truly obtain in apply.”
The Honest Compensation Charge
The Labour authorities has since moved to scale back the speed at which cash might be recouped by deductions. Following Rachel Reeves’ debut Price range in 2024, a so-called Honest Compensation Charge was introduced in.
The federal government states that this locations a cap on how a lot these in debt can have stripped from their advantages to settle what they owe. Beforehand, as much as 25% of an individual’s Common Credit score customary allowance might be deducted to repay debt – however from as we speak that determine drops to fifteen%.
The gov.uk web site said when the measure was first launched: “This may imply a mean £420 further a yr for 1.2 million of the poorest households, together with 700, 000 households with kids, whereas serving to folks to pay down their money owed in a sustainable approach.
“It varieties a part of the Authorities’s Plan for Change to place more cash into folks’s pockets and enhance dwelling requirements and marks the Authorities’s first step in a wider evaluate of Common Credit score to make sure it’s nonetheless doing its job.”But Coverage in Observe stated points remained. It stated: “This variation will not shield households from a number of cuts directly just like the profit cap, two baby restrict or bed room tax.
“The Honest Compensation Charge is a step ahead but it surely’s not sufficient. Our findings present that with out pressing reform, sanctions and deductions will preserve pushing households deeper into poverty.”
In a parliamentary response on July 4 2023, DWP minister Man Opperman defined the fragile balancing act that officers should navigate on the subject of deductions. He stated: “The Authorities recognises the significance of supporting the welfare of claimants who’ve incurred debt. We search to steadiness restoration of debt towards not inflicting hardship for claimants and their households. Processes are in place to make sure deductions are manageable, and prospects can contact the DWP Debt Administration Group if they’re experiencing monetary hardship, to debate a discount of their price of compensation, or a brief suspension, relying on their monetary circumstances.”
Associated articles
The general deduction cap can solely be breached for ‘final resort deductions’, which embody baby upkeep funds, housing price arrears (lease and or service costs) and fuel and electrical energy arrears. This ensures baby upkeep obligations are fulfilled, prevents eviction, and stops disconnection of significant utilities.
The matter of deductions was introduced earlier than Parliament by a senior Tory MP – the alternate is right here. Shadow Chancellor Mel Stride submitted a query to the Division for Work and Pensions asking “what variety of common credit score households in the latest quarter for which knowledge is out there had been topic to a deduction; and what quantity of those households had been topic to the utmost proportion discount of 15%.”
In his response, Sir Stephen Timms – Minister of State (Division for Work and Pensions) – said merely that the requested info might be present in printed Common Credit score deductions statistics.
The figures, printed this week, reveal that 3.3 million UC households had a number of deductions taken from their UC entitlement in February 2026. This represents 300,000 further households in comparison with March 2025. This rise is attributed to extra households transitioning onto UC.
The share of all UC households with a deduction stood at roughly 46% in February 2026. This proportion has remained comparatively constant over the previous 12 months.
The contemporary info from the DWP additionally signifies that roughly 21% of UC households had deductions capped at 15% of their Common Credit score customary allowance, with an extra 2% having deductions taken above the cap to help with baby upkeep funds, keep away from eviction or forestall their vitality provide being minimize off in February 2026. The proportion of UC households with deductions capped at 15% has remained comparatively regular since June 2025, when it rose following the introduction of the Honest Compensation Charge.
Leave a Reply