Published On: Thu, Oct 31st, 2019

Universal Credit changes are kicking in this month | Personal Finance | Finance

For those who are out of work or on a low income, covering living costs can be a struggle. It may be that these people are eligible to apply for Universal Credit – a monthly payment which is intended to help with the expenses of day-to-day life. Universal Credit is currently replacing six other types of state benefits, and these are Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA) and Working Tax Credit.

The introduction of Universal Credit is taking place in stages across the UK, and those who face moving to Universal Credit are told, on the website, not to do anything until they hear from the DWP about the migration.

This is unless they have a change in circumstances.

A number of changes to Universal Credit are taking place in October 2019.

This includes a change to the deduction rate, which the DWP confirmed would take place in the latter half of this month.

READ MORE: Universal Credit claimants could get £25k start-up loan for new business – who’s eligible?

How is the deduction rate changing?

In October 2019, the DWP is reducing the Universal Credit standard maximum deduction rate from 40 percent to 30 percent of the claimant’s standard allowance.

Claimants are to be notified of the change in their journal, however they do not have to do anything as the reduced rate will automatically be applied to their claim.

Standard deductions may be applied to payments for a number of reasons – and this includes to repay advance payments, to recover overpayments made through fraud or error, and court fines.


It’s estimated that lowering the rate could see a couple keep up to an extra £600 over the course of 12 months.

According to the DWP, by the end of 2019/20, around 290,000 Universal Credit households will have had reduced debt repayments.

Currently, repayments must be completed within a 12 month period, however this timescale will be increased to 16 months from October 2021.

The DWP said that last resort deductions, such as rent or fuel costs, will take precedence and only once these are accounted for, will the DWP factor in social obligation deductions – such as fines.

Will Quince, Minister for Welfare Delivery said: “We know that many people move onto Universal Credit with existing debt, or choose to take up an advance to support them before their first payment.

“While safeguards are already in place to ensure that deductions are affordable we’ve taken this extra step to reduce the standard maximum deduction rate from 40 percent to 30 percent of the claimant’s standard allowance to ease the burden.

“Unlike the old system, Universal Credit is a flexible benefit that can be adapted as people’s needs change, ensuring they have more control over their working lives and their finances.”

How is Universal Credit paid?

The payment is usually made once a month, and this tends to be into a bank, building society or credit union account.

The payment may include an amount for housing, which one will usually need to pay to their landlord.

The government website says it normally takes around five weeks to get the first payment.

This includes a one month assessment period, as well as up to seven days for the payment to reach one’s account.

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