Benefits claimants could see much of their rates increase this year cancelled out by rises in deductions. The DWP is set to increase benefit rates in April in line with September's CPI figure of 10.1%.
The news will come as a major relief to millions of those on low incomes who had been fearing a below-inflation increase to rates before Chancellor Jeremy Hunt announced the news in his autumn statement back in November. The average household on universal credit would be £65.49 better off a month as a result of the rise.
But deductions from benefits - money taken out of benefit payments to repay debts - will add up to an average of £62 per month from April, leaving people with just £3.50 extra, according to Citizens Advice Scotland. Money can be taken out of benefits to repay debts such as money owed on rent, energy or water bills, council tax, unpaid fines, and child maintenance.
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It can also be deducted to claw back any overpayments along with advance payments given during the five-week wait for a first universal credit payment to go in, budgeting loans and hardship payments. To get all the latest money-saving news straight to your inbox twice a week sign up here.
How much universal credit deductions will go up in April 2023
Third party deductions
5% of universal credit standard allowance can be taken off for debts or arrears owed to other people or organisations such as energy firms, local authorities and landlords. This is how amounts will change for different categories of claimants:
- Single claimant under 25 - increasing from £13.27 to £14.61
- Single claimant aged 25 or over - increasing from £16.75 to £18.44
- Joint claimants both under 25 - increasing from £20.82 to £22.93
- Joint claimants, one or both 25 or over - increasing from £26.29 to £28.94
Deductions for rent and service charges
Minimum deductions for rent and service charges included in rent are 10% of universal credit standard allowance. This is how those deductions will go up:
- Single claimant under 25 - increasing from £26.53 to £29.21
- Single claimant aged 25 or over - increasing from £33.49 to £36.87
- Joint claimants both under 25 - increasing from £41.65 to £45.85
- Joint claimants, one or both 25 or over - increasing from £52.57 to £57.88
The maximum deduction for rent and service charges included in rent is 20% of universal credit standard allowance. This is how that amount will rise in April:
- Single claimant under 25 - increasing from £53.06 to £58.42
- Single claimant aged 25 or over - increasing from £66.98 to £73.75
- Joint claimants both under 25 - increasing from £83.29 to £91.70
- Joint claimants, one or both 25 or over - increasing from £105.14 to £115.76
Overall maximum deduction rate
This is set at 25% of the universal credit standard allowance, so this is how it will change in April:
- Single claimant under 25 - increasing from £66.33 to £73.03
- Single claimant aged 25 or over - increasing from £83.73 to £92.19
- Joint claimants both under 25 - increasing from £104.11 to £114.63
- Joint claimants, one or both 25 or over - increasing from £131.43 to £144.71
Fraud overpayments, recoverable hardship payments and administrative penalties
These are also set at 25% of the universal credit standard allowance:
- Single claimant under 25 - increasing from £66.33 to £73.03
- Single claimant aged 25 or over - increasing from £83.73 to £92.19
- Joint claimants both under 25 - increasing from £104.11 to £114.63
- Joint claimants, one or both 25 or over - increasing from £131.43 to £144.71
Ordinary overpayments
Ordinary overpayments and civil penalties are set at 15% of the universal credit standard allowance:
- Single claimant under 25 - increasing from £39.80 to £43.82
- Single claimant aged 25 or over - increasing from £50.24 to £55.31
- Joint claimants both under 25 - increasing from £62.47 to £68.78
- Joint claimants, one or both 25 or over - increasing from £78.86 to £86.82
Ordinary overpayments and civil penalties can rise to 25% of the universal credit standard allowance if a claimant's and/or partner's earnings are over the work allowance:
- Single claimant under 25 - increasing from £66.33 to £73.03
- Single claimant aged 25 or over - increasing from £83.73 to £92.19
- Joint claimants both under 25 - increasing from £104.11 to £114.63
- Joint claimants, one or both 25 or over - increasing from £131.43 to £144.71
Daily reductions for sanctions
When benefits are cut by a sanction, the highest reduction in payment is 100% and will go up as follows:
- Single under 25 - increasing from £8.70 to £9.50
- Single 25 or over - increasing from £11 to £12
- Joint claimants both under 25 (per sanctioned claimant) - increasing from £6.80 to £7.50
- Joint claimants, one or both 25 or over and one is sanctioned (per sanctioned claimant) - increasing from £8.60 to £9.40
For a sanction that results in a 40% benefit reduction, amounts taken off payments will change as follows:
- Single under 25 - increasing from £3.40 to £3.80
- Single 25 or over - increasing from £4.40 to £4.80
- Joint claimants both under 25 (per sanctioned claimant) - increasing from £2.70 to £3
- Joint claimants, one or both 25 or over (per sanctioned claimant) - increasing from £3.40 to £3.70
Child maintenance deduction
- Staying the same at £36.40
A DWP spokesperson said: "Deductions help protect claimants from enforcement actions such as eviction, ensure priority debts such as child maintenance are still addressed and help to recover taxpayers’ money. We have reduced the standard cap on deductions twice in recent years, to 25% of the universal credit standard allowance, doubled the period over which new claim advances can be repaid and stopped utility companies from being able to increase payments automatically.
"We recognise the pressures of the rising cost of living, which is why the government is offering up to £1,350 of direct help to those most in need in 2023/24 on top of £1,200 to over eight million vulnerable households this financial year."
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