The DWP has issued an update on the number of claimants facing deductions from their Universal Credit entitlement
Millions of Universal Credit claimants are having money stripped from their payments, according to DWP figures – and it’s going up. Fresh data published this week reveals that 3.3 million households on Universal Credit had one or more deductions taken from their UC entitlement in February 2026.
Nearly half – 46 per cent – of those receiving the benefit are experiencing deductions, with the figure climbing by 300,000 in just a year, the new report shows. DWP officials attribute this rise to the growing number of people now claiming Universal Credit compared to 12 months ago.
Those previously on so-called legacy benefits – including Housing Benefit, income-related Employment and Support Allowance (ESA) and income-based Jobseeker’s Allowance (JSA) – are being migrated onto Universal Credit as part of the government’s welfare overhaul. But campaigners say the deductions the Universal Credit system allows drive people into poverty.
A “deduction” refers to a sum of money removed from the monthly UC entitlement to pay off a debt owed to the government or another organisation. Deductions are subtracted from the monthly UC entitlement once any adjustments reflecting the household’s financial situation, such as earnings, have been applied, officials say.
There are three main reasons why deductions are made. These can be over Universal Credit advance payments that need repaying, money owed to firms such as energy companies, or money owed to government organisations such as the DWP or HMRC
The sum withdrawn for each debt varies depending on the debt type and mix of debts owed by the household. According to homelessness charity Shelter, the maximum deductions from April 2026 are as follows. A single person aged under 25 faces a maximum deduction of £51 monthly. Those over 25 would see a maximum of £64 per month.
The situation differs for couples. If both are under 25, the cap is £79 monthly. If either partner is 25 or older, the cap rises to £100 monthly.
The government states there’s a priority sequence for deductions, beginning with advances, followed by third-party debts such as rent and utility arrears, then government debts including social fund loans and tax credit overpayments. Any deductions that would exceed the overall deduction cap aren’t taken but are dealt with when capacity exists within the cap, officials say. Consequently, for households juggling multiple debt types, deductions for debts lower down the priority sequence are more prone to exceeding the cap, and therefore wouldn’t be collected.
Rightsnet reported in 2023 that over 2 million children live in households facing a Universal Credit deduction. It also stated that over 900,000 households claiming universal credit are currently repaying a budgeting advance.
In an analysis released last year by Policy in Practice, the use of deductions came under fire. It noted: “Deductions for debt repayments and sanctions routinely reduce the amount households actually receive, undermining financial security and pushing many households deeper into hardship.
“These deductions do more than lower income levels; they increase income volatility, making it harder for low income households to budget and plan ahead. This instability has far reaching consequences, particularly for housing affordability and the risk of homelessness.
“To truly understand the impact of Universal Credit on poverty and financial insecurity, policymakers must look beyond headline award rates and consider what people actually receive in practice.” The Labour government has cut the rate at which funds can be recouped through deductions. Following Rachel Reeves’ inaugural Budget in 2024, a so-called Fair Repayment Rate was brought in.
The government says it caps the amount that those in debt can have deducted from their benefits to settle what they owe. Previously, up to 25% of someone’s Universal Credit standard allowance payment could be taken to repay debt – but this dropped last year to 15%. The gov.uk website stated when it was first introduced: “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.
“It forms part of the 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.”
Yet Policy in Practice said issues remained. It said: “This change won’t protect families from multiple cuts at once like the benefit cap, two child limit or bedroom tax.
“The Fair Repayment Rate is a step forward but it’s not enough. Our findings show that without urgent reform, sanctions and deductions will keep pushing families deeper into poverty.”
In a parliamentary response on July 4 2023, DWP minister Guy Opperman explained the balancing act that has to be gone through by officials when it comes to deductions. He said: “The Government recognises the importance of supporting the welfare of claimants who have incurred debt. We seek to balance recovery of debt against not causing hardship for claimants and their families. Processes are in place to ensure deductions are manageable, and customers can contact the DWP Debt Management Team if they are experiencing financial hardship, to discuss a reduction in their rate of repayment, or a temporary suspension, depending on their financial circumstances.”
The overall deduction cap can only be exceeded for ‘last resort deductions’, which cover child maintenance payments, housing cost arrears (rent and/or service charges) and gas and electricity arrears. These exceptions exist to ensure child maintenance obligations are fulfilled, evictions are prevented, and essential utilities remain connected.
Latest Universal Credit deductions data spelt out
The matter was brought before Parliament by a senior Tory MP. Shadow Chancellor Mel Stride put a question to the Department for Work and Pensions asking “what number of universal credit households in the most recent quarter for which data is available were subject to a deduction; and what proportion of these households were subject to the maximum percentage reduction of 15%.”
In reply, Sir Stephen Timms – Minister of State (Department for Work and Pensions) – simply stated that the requested information could be found in published Universal Credit deductions statistics.
The figures, released this week, reveal that 3.3 million UC households had one or more deductions taken from their UC entitlement in February 2026. That represents 300,000 more households than faced a deduction in March 2025, with the rise attributed to greater numbers of households transitioning onto UC.
Roughly 46% of all UC households had a deduction in February 2026, a proportion that has remained broadly consistent over the preceding 12 months.
The fresh DWP data also indicates that around 21% of UC households had deductions capped at 15% of their Universal Credit standard allowance. Just over 2% had deductions taken above the cap to assist with child maintenance payments, prevent eviction or disconnection of their energy supply in February 2026. The proportion of UC households with deductions capped at 15% has remained broadly steady since June 2025, when it rose following the introduction of the Fair Repayment Rate.
