Overview

• The Department for Work and Pensions (DWP) will reduce the maximum deduction rate for Universal Credit payments from 25% to 15%, effective April 30, 2025.
• This policy is expected to benefit 1.2 million households, including 700,000 families with children, by allowing claimants to retain more of their benefits.
• Deductions cover debts such as benefit advances, overpayments, rent or council tax arrears, and utility bills, but fraud penalties and sanctions remain exempt from the cap.
• For a single claimant under 25, the new cap will reduce maximum monthly deductions by £31.70, resulting in an annual increase of approximately £380 in retained income.
• The reform aims to alleviate financial strain on low-income households, though creditors receiving repayments through deductions may see reduced contributions.