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 payments 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.
Universal Credit Debt Deductions to Be Lowered
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 receiving Universal Credit will have more money in their pockets each month instead of losing a quarter of their payment to debt repayments.
- The types of debts that can be recovered through Universal Credit include:
- Council tax arrears
- Rent arrears
- Energy and water bills
- Service charges
- Child maintenance payments
- Court fines
- Benefit overpayments owed to the DWP
Additionally, only three third-party deductions can be made at a time, which helps prevent excessive reductions in payments.
New Universal Credit Deduction Rates from April 2025
The DWP has confirmed the new rates for deductions, which will provide more financial relief to Universal Credit claimants.
1. Maximum Deduction Rate (Reduced from 25% to 15%)
| Category | Current Deduction | New Deduction (from April 2025) |
|---|---|---|
| Single under 25 | £77.92 | £47.55 |
| Single 25 or over | £98.36 | £60.02 |
| Joint claimants both under 25 | £122.31 | £74.63 |
| Joint claimants, one or both 25 or over | £154.40 | £94.22 |
2. Minimum Deductions for Rent and Service Charges (Set at 10%)
| Category | Current Deduction | New Deduction (from April 2025) |
|---|---|---|
| Single under 25 | £31.17 | £31.70 |
| Single 25 or over | £39.35 | £40.01 |
| Joint claimants both under 25 | £48.92 | £49.76 |
| Joint claimants, one or both 25 or over | £61.76 | £62.81 |
3. Maximum Deductions for Rent and Service Charges (Reduced from 20% to 15%)
| Category | Current Deduction | New Deduction (from April 2025) |
|---|---|---|
| Single under 25 | £62.34 | £47.55 |
| Single 25 or over | £78.69 | £60.02 |
| Joint claimants both under 25 | £97.85 | £74.63 |
| Joint claimants, one or both 25 or over | £123.52 | £94.22 |
4. Third-Party Deductions (Increased to 5%)
These deductions exclude rent and service charges but apply to other debts like council tax and utility bills.
| Category | Current Deduction | New Deduction (from April 2025) |
|---|---|---|
| Single under 25 | £15.58 | £15.85 |
| Single 25 or over | £19.67 | £20.01 |
| Joint claimants both under 25 | £24.46 | £24.88 |
| Joint claimants, one or both 25 or over | £30.88 | £31.41 |
What These Changes Mean for Universal Credit Claimants
The reduction in Universal Credit debt deductions will offer significant financial relief to those struggling to cover their living costs. With more of their benefit payment remaining untouched, claimants will have an easier time managing rent, utility bills, and other essential expenses.
These changes come as part of the government’s effort to support low-income individuals and families, especially amid the ongoing cost-of-living crisis. By lowering the maximum deduction rate, the government is allowing claimants to keep more of their money while still making structured repayments toward their debts.
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. However, if you’re struggling with debt, you can also seek financial advice from charities such as StepChange, Citizens Advice, and Turn2us.
FAQ
How much will Universal Credit deductions reduce in April 2025?
From April 2025, the maximum deduction rate will decrease from 25% to 15%, allowing claimants to keep more of their Universal Credit payments each month.
What debts can be deducted from Universal Credit?
Debts that can be deducted include rent arrears, council tax, energy and water bills, service charges, child maintenance, court fines, and benefit overpayments.
Do I need to apply for the new lower deduction rates?
No, the changes will be applied automatically from April 2025. Claimants do not need to take any action.
Can I stop Universal Credit deductions completely?
In some cases, you can request a lower deduction if it causes financial hardship. You may need to contact the DWP or seek advice from Citizens Advice.
Will these changes affect all Universal Credit claimants?
Yes, these new deduction rates will apply to all Universal Credit claimants with outstanding debts being repaid through their benefit payments.
