Changes to Universal Credit Deductions

The UK government is making changes to Universal Credit deductions starting in April 2025. These changes will reduce the amount the Department for Work and Pensions (DWP) can take from a claimant’s Universal Credit payment to repay debts.

If you receive Universal Credit and owe money for rent, council tax, energy bills, or other debts, here’s what you need to know about the new deduction rates.

Currently, the DWP can deduct up to 25% of a claimant’s Universal Credit standard allowance to repay debts. However, from April 2025, this will be reduced to 15%. This means people who have Universal Credit deductions  will have more money each month instead of losing a quarter of their payment to debt repayments.

The types of debts that can be recovered through Universal Credit (known as third party deductions) include:

• Rent arrears
• Council tax arrears
• Energy and water bills
• Service charges
• Child maintenance payments
• Court fines
• Benefit overpayments owed to the DWP

Only three third-party deductions can be made at a time, which helps prevent excessive reductions in payments.

Deductions for Rent Arrears

If you have rent arrears, we will always try to work with you directly to agree the best way for you to clear your rent account.  We will only apply for third-party deductions if you receive Universal Credit and we agree this with you, or we have tried and been unable to agree a repayment plan with you.  Our Housing Officers can work with you to ensure that any repayment agreement you make with us is both reasonable and affordable for you. Please contact your Housing Officer if you are having any difficulties with your rent payments. 

Remember – you are not eligible for Gold or Platinum Key Tenant Scheme status and our Rent Discounts if we have to apply for deductions from you, so we do want to avoid this wherever possible.

New Universal Credit Deduction Rates from April 2025

What These Changes Mean for Universal Credit Claimants

The reduction in Universal Credit debt deductions may offer some financial relief to those struggling to cover their living costs. With more of their benefit payment remaining untouched, it may help people to manage their bills a little easier.

If you rely on Universal Credit and have existing deductions, you don’t need to take any action—the changes will automatically take effect in April 2025.