As the cost of living crisis continues to place an immense amount of financial pressure on vulnerable households, many will be depending on their benefit payments to make ends meet.
However, it's important to stay informed on how much money you will be paid from your benefits and if they are subject to deductions. According to the government, if you owe money for a wide range of reasons, such as rent, council tax, energy payments, or court fines, then this money can be taken directly out your benefits - this is known as a 'third party deduction'.
If money is deducted for gas and electricity, then this will be referred to as 'Fuel Direct'. Organisations are legally allowed to ask for deductions to be made on your benefits if you owe them money.
However, this is often a last resort and the office that pays your benefits will usually try other ways of getting the money you owe from you. Here's everything you need to know if you're worried about deductions being made on your benefits...
Which benefits are subjected to deductions?
Not all benefits are subjected to deductions. According to the government, the following benefits can have money taken out of them if you owe money:
- Universal Credit
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Income Support
- Pension Credit
If money will be deducted from your benefit payment, you will either receive a letter informing you of this or it will appear in your Universal Credit journal.
How much money is deducted from my benefits for debt?
A fixed amount will be taken from your benefit payment until the debt has been paid off. It's important to note that money can be taken off your benefits for up to three debts at the same time.
For Universal Credit payment, 5 per cent can be deducted for each debt you owe. If the deductions is for rent, then between 10 per cent and 20 per cent can be taken.
For other benefits, around £3.85 a week can be taken for each debt. If you want to pay more of the debt off with a higher deduction, you will have to arrange this with the organisation to which you owe money to.
How much money is deducted from my benefits for energy?
If you are struggling to pay for your gas and electricity bills, you can ask for payments to be taken out of your benefits to pay for them. It's important to note that only the claimant can ask for this deduction and not the supplier.
Before doing this, you should ensure that the cost of energy you use is not higher than the benefit payment that will be deducted. Deductions are not the only way to pay for your energy bills and it's always worth asking your supplier for help with bills if you're struggling.
For water bills, your supplier can ask for money to be deducted from benefit payments. The office that pays your benefit will inform you that your supplier has asked for this - if the amount take is over 25 per cent of your benefits then the office must ask you to approve it.
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