Latest news with #FairRepaymentRate
Daily Record
26-05-2025
- Business
- Daily Record
Universal Credit payment boost for over one million people this month
Households will benefit from an extra £420 this year following a DWP rule change. Reasons your Universal Credit may be cut by DWP The Department for Work and Pensions (DWP) recently confirmed that over one million households struggling with debt will get to keep an average £420 more of their benefits each year, under a change to Universal Credit which came into force at the end of last month. The Fair Repayment Rate places a limit on how much people in debt can have taken off their benefits to pay what they owe. The maximum amount that can be taken from someone's Universal Credit standard allowance payment to repay debt was 25 per cent, but was reduced to 15 per cent on April 30. The change affects all assessment periods that started on or after that date and means claimants due their monthly payments from May 30 will benefit from the reduction. It means an average of £420 extra a year for 1.2 million of the poorest households, including 700,000 households with children, while helping people to pay down their debts in a sustainable way. It forms part of the UK Government's Plan for Change to put more money into people's pockets and boost living standards and marks the Government's first step in a wider review of Universal Credit to ensure it is still doing its job. The Fair Repayment Rate was introduced by Chancellor Rachel Reeves at the Autumn Budget, as part of broader efforts to raise living standards, combat poverty, and tackle the cost of living crisis. The Chancellor said: 'As announced at the Budget, 1.2 million households will keep more of their Universal Credit and will be on average £420 better off a year. This is our plan for change delivering, easing the cost of living and putting more money into the pockets of working people.' With as many as 2.8 million households seeing deductions made to their Universal Credit award to pay off debt each month, the new rate is designed to ensure money is repaid where it is owed, and people can still cover their day-to-day needs. Work and Pensions Secretary Liz Kendall said: 'As part of our Plan for Change, we are taking decisive action to ensure working people keep more of the benefits they're entitled to - which will boost financial security and improve living standards up and down the country. 'We're delivering meaningful change to ensure everyone has a fair chance, the support they need, and real hope for the future.' The Fair Repayment Rate is one of a number of bold measures the UK Government is taking as part of its Plan for Change to kickstart growth and spread prosperity across the country. Viewing work as a key route out of poverty, the Labour Government set out the Get Britain Working White Paper - aiming to achieve its target 80 per cent employment rate by overhauling Jobcentres, introducing a new jobs and careers service, and launching a youth guarantee so every young person is earning or learning. This comes on top of increasing the National Minimum and National Living Wage to ensure being in work pays.
Daily Record
01-05-2025
- Business
- Daily Record
DWP confirms Universal Credit rule change set to boost income by £420 for over one million households
The Department for Work and Pensions (DWP) has announced that over one million households struggling with debt will get to keep an average £420 more of their benefits each year, under a change to Universal Credit which came into force on April 30. The Fair Repayment Rate places a limit on how much people in debt can have taken off their benefits to pay what they owe. The maximum amount that can be taken from someone's Universal Credit standard allowance payment to repay debt has been 25 per cent - but has now been reduced to 15 per cent. This will mean an average £420 extra a year for 1.2 million of the poorest households, including 700,000 households with children, while helping people to pay down their debts in a sustainable way. The change will be applied to all assessment periods that start on or after April 30. It forms part of the UK Government's Plan for Change to put more money into people's pockets and boost living standards and marks the Government's first step in a wider review of Universal Credit to ensure it is still doing its job. The Fair Repayment Rate was introduced by Chancellor Rachel Reeves at the Autumn Budget, as part of broader efforts to raise living standards, combat poverty, and tackle the cost of living crisis. The Chancellor said: 'As announced at the Budget, 1.2 million households will keep more of their Universal Credit and will be on average £420 better off a year. This is our plan for change delivering, easing the cost of living and putting more money into the pockets of working people.' With as many as 2.8 million households seeing deductions made to their Universal Credit award to pay off debt each month, the new rate is designed to ensure money is repaid where it is owed, and people can still cover their day-to-day needs. Work and Pensions Secretary Liz Kendall said: 'As part of our Plan for Change, we are taking decisive action to ensure working people keep more of the benefits they're entitled to - which will boost financial security and improve living standards up and down the country. 'We're delivering meaningful change to ensure everyone has a fair chance, the support they need, and real hope for the future.' The Fair Repayment Rate is one of a number of bold measures the UK Government is taking as part of its Plan for Change to kickstart growth and spread prosperity across the country. Viewing work as a key route out of poverty, the Labour Government set out the Get Britain Working White Paper - aiming to achieve its target 80 per cent employment rate by overhauling Jobcentres, introducing a new jobs and careers service, and launching a youth guarantee so every young person is earning or learning. This comes on top of increasing the National Minimum and National Living Wage to ensure being in work pays.
The Herald Scotland
30-04-2025
- Business
- The Herald Scotland
Universal Credit change and £420 boost for 1.2 million homes
It places a limit on how much people in debt can have taken off their benefits to pay what they owe. What is the Fair Repayment Rate? The Fair Repayment Rate was introduced by the Chancellor at the Autumn Budget, as part of broader efforts to raise living standards, combat poverty, and tackle the cost-of-living crisis. Chancellor of the Exchequer Rachel Reeves said: "As announced at the budget, from today, 1.2 million households will keep more of their Universal Credit and will be on average £420 better off a year. This is our plan for change delivering, easing the cost of living and putting more money into the pockets of working people. "With as many as 2.8 million households seeing deductions made to their Universal Credit award to pay off debt each month, the new rate is designed to ensure money is repaid where it is owed, and people can still cover their day-to-day needs." Recommended reading: How does it work in a Universal Credit assessment period? The maximum amount that can be taken from someone's Universal Credit standard allowance payment to repay debt has been 25% – but from today this is reduced to 15%. This will mean an average £420 extra a year for 1.2 million of the poorest households, including 700,000 households with children, while helping people to pay down their debts in a sustainable way. The change will be applied to all assessment periods that start on or after 30 April.
Daily Mirror
25-04-2025
- Business
- Daily Mirror
DWP Universal Credit change to give £420 boost to 1.2million households
Confirmed by Labour Chancellor Rachel Reeves in the Autumn Budget last year, the maximum deductions from the standard allowance will drop from 25% to 15% Over one million Universal Credit claimants are set to get a £420 boost this month after a major Department for Work and Pensions (DWP) change. The DWP will lower the cap on the maximum level of deductions that can be taken from a claimant's benefit payments from April 30. Confirmed by Labour Chancellor Rachel Reeves in the Autumn Budget last year, the maximum deductions from the standard allowance will drop from 25% to 15%. Currently, the DWP and other third parties can deduct 25% of someone's Universal Credit standard allowance payment to recover any debts someone may have. The amounts are subtracted from a claimant's standard allowance each month until the debt is repaid. These deductions can cover a range of debts, including benefit advances, historical overpayments of child tax credits, rent and council tax arrears, as well as outstanding water and utility bills. Money can be deducted from your Universal Credit payments to pay off up to three debts at once with at least 5% being deducted for each debt you owe. The types of deduction that can be taken are ordered by priority. Deductions for a fraud penalty, sanction or advance are taken first. If the total of these is not above 25% of the claimant's Standard Alowance then other deductions can be taken However, once the 25% limit is reached, any remaining - lower priority - deductions cannot be taken unless it is a "last resort deduction". Last resort deductions help prevent eviction or the cutting off of gas or electricity. They are primarily used to cover rent, home service changes, or energy arrears. This money is paid directly to the third party to whom you owe money. The new Fairer Repayment Rate will not cover deductions related to fraud penalties or sanctions. This means Universal Credit claimants can have more taken off their Standard Allowance. Alongside this, deductions for child support will move up the priority list – to above repaying Universal Credit advances and third-party deductions for rent arrears. The move - called the Fair Repayment Rate - is intended primarily to help the worst-off families. At the time, Reeves said the change would benefit 1.2million households, including 700,000 families with children, boosting their incomes by up to £420 a year - or £35 a month. Save the Children estimates that the measure could see single parents receive up to £39 more of their Universal Credit entitlement each month. For two-parent households, this could be up to £62. The move has been welcomed by charities, including Save the Children, who described the current level of benefit deductions as "unfair and unsustainable". Ruth Talbot, Save the Children UK's policy and advocacy adviser, said: 'It is bold thinking from ministers and we know it will have a significant impact for families and put more money in their pockets for food, toys, clothes and books.' Join Money Saving Club's specialist topics For all you savvy savers and bargain hunters out there, there's a golden opportunity to stretch your pounds further. The Money Saving Club newsletter, a favourite among thousands who thrive on catching the best deals, is stepping up its game. Simply follow the link and select one or more of the following topics to get all the latest deals and advice on: Travel; Property; Pets, family and home; Personal finance; Shopping and discounts; Utilities. At the time, Sebrian McCullough, director of external relations at the debt free advice firm Money Wellness commented: "We've been lobbying for changes to benefit deductions for some time. The reduction from 25% to 15% is a positive step for some of the most vulnerable in society. This is because people trying to survive on inadequate income inevitably increase their reliance on credit. "64% of the people we support with benefit deductions also need access to a food bank. That is why, longer term, we would like to see the government move towards making decisions based on individual affordability in order to ensure no one is left without enough money for essentials."
Scottish Sun
25-04-2025
- Business
- Scottish Sun
Major Universal Credit change launching in DAYS giving 1.2million households a £420 pay rise
Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) A MAJOR change to Universal Credit, set to take effect in just a few days, will grant claimants a £420 increase in payments. The Department for Work and Pensions (DWP) will lower the cap on the maximum level of deductions that can be taken from a claimant's benefit payments from April 30. 1 The change will benefit 1.2million households, including 700,000 families with children, boosting their incomes by up to £420 a year Credit: Alamy The benefits office can deduct money from a Universal Credit claimant's allowance to help them make debt repayments. These deductions can cover a range of debts, including benefit advances, historical overpayments of child tax credits, rent and council tax arrears, as well as outstanding water and utility bills. The amounts are subtracted from a claimant's Universal Credit standard allowance each month until the debt is fully repaid. Currently, the DWP and third parties can typically deduct up to 25% of a claimant's standard allowance to manage their debt repayments. However, this threshold is set to be reduced to 15% by the end of the month, under a new scheme dubbed the Fair Repayment Rate. The change is projected to benefit 1.2 million households, including 700,000 families with children, boosting their incomes by up to £420 a year. However, some Universal Credit claimants will still have more than 25% of their standard allowance taken off if deductions are related to fraud penalties or sanctions. How will the cut work in practice? THE Universal Credit standard allowance is paid at four different rates: Single and aged under 25: £316.98 per month Single and aged 25 or over: £400.14 per month Joint claimants both aged under 25: £497.55 per month Joint claimants where one is aged 25 or over: £628.10 Therefore, if an individual under 25 faces a 25% deduction, their standard allowance will decrease by £79.25 per month, reducing their payment to £237.73 per month. However, if the same individual faces a 15% deduction, their standard allowance will decrease by £47.55 per month (£31.70 less than a 25% deduction), reducing their payment to £269.43 per month. How does work affect Universal Credit? TYPES OF UNIVERSAL CREDIT DEDUCTIONS There are a number of reasons why the Department for Work and Pensions (DWP) will deduct money from your Universal Credit allowance to help pay off any debts. Conor Lawlor, benefits expert at Turn2us, says: "These debts can accrue in several ways, including for Universal Credit and other benefit overpayments (even if the overpayment was made in error by DWP), benefit advances and recovering hardship payments. "The DWP can also deduct on behalf of third parties if a claimant is in debt to them, including for rent and service charge arrears, council tax arrears, court fines, child maintenance, and for utilities like electricity, gas and water." However, it's important to note that not every deduction is compulsory, and some are voluntary. Here are the six main forms of deductions you could be affected by... 1. ADVANCE PAYMENTS One of the most common reasons for a Universal Credit deduction is because a claimant applied for advance payments. When you make a new claim for Universal Credit, you will normally receive your first payment seven days after the end of your first assessment period (four weeks) - this is known as the "five-week wait". You can apply for an advance payment of your Universal Credit if you are in financial hardship while you wait for your first payment, for example, if you can't afford to pay your rent or buy food. However, as this is a loan, you will be expected to pay it back. The first deduction is made on the day you get your first payment. You must usually pay back the advance within: 24 months if you apply for the advance if you've made a new claim for Universal Credit Six months if you apply for the advance because of a change of circumstances 2. BUDGETING ADVANCE The budgeting advance should not be confused with an advance payment. Instead, this is an interest-free loan that can be used to cover certain expenses like household furniture, equipment, and clothing. What you get will depend on how much you need. The smallest amount you can borrow is £100. You can get up to: £348 if you're single £464 if you're part of a couple £812 if you have children The budgeting loan repayments will be taken automatically from your benefits. The amount you repay is based on your income. A budgeting advance should normally be repaid within one year, but this is extendable to 18 months in exceptional circumstances. 3. UNIVERSAL CREDIT OVERPAYMENTS If you've been paid too much Universal Credit you'll accure an overpayment. To learn more about an overpayment, sign into your online Universal Credit account, go to your journal, and look for a message about overpayments. If money is being deducted from your Universal Credit to pay back the overpayment, the amount deducted depends on your circumstances. If you are receiving Universal Credit and have no earned income, the maximum amount that can be deducted from your Universal Credit for overpayments is 15% of your standard allowance. If you are receiving Universal Credit and have some earned income, the maximum amount that can be deducted from your Universal Credit for overpayments is 25% of your standard allowance. 4. TAX CREDIT OVERPAYMENTS If you are getting tax credits and you claim Universal Credit, HMRC will be told to stop your tax credits. However, if you receive tax credits after you have made your claim to Universal Credit this could result in you being paid too much tax credits. Universal Credit will take action to get this money back as well as any other tax credit over-payments you have. HMRC will send you a letter called "Your Tax Credits over-payments (TC1131)". This will tell you about any tax credit repayments that will be taken out of your Universal Credit payments. 5. FRAUD AND SANCTIONS If you deliberately do not provide details about a change in your circumstances that could affect your Universal Credit payments or you give false information, this is fraud. A fraud penalty or sanction will reduce your Universal Credit standard allowance. This can be up to 100% of your standard allowance if you are single, or up to 50% for each person in a joint claim. If a fraud penalty or sanction is being taken from your Universal Credit payments, no other repayment or deduction will be taken, except for last-resort deductions. 6. THIRD-PARTY DEDUCTIONS A third-party deduction is an amount that is taken from your Universal Credit payments and paid direct to the person or organisation you owe money to, such as your landlord or your gas or electricity supplier (Fuel Direct). Third-party deductions can also be taken, without your permission, for things like: Housing costs (for example, rent arrears for your current address) Unpaid rates Child maintenance Only three third-party deductions can be taken at any one time. Universal Credit will send you a message in your online journal when a third-party deduction starts. Third-party deductions are fixed at 5% of your Universal Credit standard allowance for each third party. However, for rent, deductions are fixed between 10% and 20%. Unlike the other non-voluntary deductions listed above, claimants can initiate deductions for certain bills to help better manage their costs. For example, you can contact your energy supplier to set up deductions for your ongoing bills through the Fuel Direct scheme.
