Universal Credit and Pension Credit are essential sources of financial support for many in the UK. Yet, the Department for Work and Pensions (DWP) cautions that, in highly exceptional cases, claimants could experience reductions of 5% to 15%.

These cuts, called ‘third-party deductions’, happen when a benefits recipient owes debts like court fines, rent, Council Tax, or energy bills. Usually, deductions are made at a fixed rate until the debt is paid off, with a maximum of three debts being managed this way at the same time.

For people receiving Universal Credit, each debt results in a 5% reduction in their benefit payment. This deduction can increase to between 10% and 15% in cases of rent arrears. Claimants of other benefits such as income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), and Income Support may also face a weekly deduction of £4.55 per debt.

The DWP typically authorises third-party deductions when an organisation requests them, usually after other recovery methods have been unsuccessful. Advice from the Government department explains: “You’ll be told how much will be deducted by letter or in your Universal Credit journal.”

As per the Mirror, it also adds: “If you want to pay more than the fixed rate towards your debts, you must arrange this with the organisation you owe money to.”

Brits facing ‘fuel debt’—the amount owed for gas and electricity—may also use the term Fuel Direct when arranging deductions to pay for their energy bills. The DWP advises: “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.”

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.”

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