The Department for Work and Pensions (DWP) has confirmed a change to the Fair Repayment Rate for Universal Credit payments from next month
The Department for Work and Pensions (DWP) has unveiled new changes to the Fair Repayment Rate for those on Universal Credit.
Chancellor Rachel Reeves revealed the Fair Repayment rate during the Autumn Budget in October, with plans for it to come into effect from April 30. This is a permanent change that will reduce the overall deductions cap for Universal Credit from 25% to 15% of a claimant’s standard allowance.
The DWP said this new measure will boost households’ income from their Universal Credit award by an average of about £35 each month, or £420 over the 2025/26 financial year.
The UK Government maintains that all parents have a responsibility to support their children and recognises the overall impact child support maintenance has in lifting children out of poverty.
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To back this up, a pledge was made to move the child maintenance deduction higher up the regulated priority order. This would ensure that when the Fair Repayment Rate is implemented, it would not decrease the current number of child maintenance deductions being made from a Universal Credit award.
In line with this commitment, the DWP felt it necessary to put in place further protection to ensure the child maintenance deduction can be made even if this would result in the overall deductions cap of 15% being exceeded.
The DWP recognises that child maintenance payments provide vital financial support. This regulatory change, along with the policy decision to exceed the new overall deductions cap of 15% where applicable, will continue to enable child maintenance payment when other payment methods have failed or are not feasible.
This regulatory adjustment will be temporarily in place for a year as the DWP seeks to gather more evidence on the impact of the child maintenance deduction change on Universal Credit households, particularly its ability to address other debts.
The gathered evidence will decide whether this temporary change should become permanent or if a different approach is needed.
Universal Credit and other DWP-related benefits saw a 1.7% increase on April 7. As most benefits are paid in arrears, claimants will not see the full uprating until the next assessment period has been completed.
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