Recipients of Universal Credit could face cuts worth between 5% and 20% in particular circumstances, according to advice from the DWP
Lauren Haughey Lifestyle and Money Reporter
05:01, 01 Nov 2025
DWP benefits may face ‘third party deductions’ in very exceptional circumstances(Image: ozgurcankaya via Getty Images)
Universal Credit and Pension Credit are crucial financial support mechanisms for people across the UK. Yet, the Department for Work and Pensions (DWP) cautions that recipients could encounter reductions ranging from 5% to 15% under highly unusual circumstances.
These reductions, known as ‘third party deductions’, occur when benefit recipients have outstanding debts for court fines, rent arrears, Council Tax or utility bills. Typically, this deduction operates at a set rate until the outstanding amount or amounts are cleared, with a ceiling of three debts being recoverable simultaneously through this approach.
For Universal Credit recipients, 5% is removed from your benefit payment for each outstanding debt, although for rental arrears, this figure may climb to between 10% and 15%. Those receiving alternative benefits, including income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA) and Income Support, could also experience a weekly reduction of £4.55 for each debt owed.
The DWP’s catalogue of those impacted is below:
Universal CreditIncome-based Jobseeker’s Allowance (JSA)Income-related Employment and Support Allowance (ESA)Income SupportPension Credit
Third party deductions are typically sought by organisations to whom money is owed by a person. These requests are subsequently approved by the DWP under exceptional circumstances where an organisation has pursued all other methods to reclaim the outstanding money.
“You’ll be told how much will be deducted by letter or in your Universal Credit journal,” the DWP’s advice explains, according to the Mirror. “…If you want to pay more than the fixed rate towards your debts, you must arrange this with the organisation you owe money to.”
Third-party deductions for ‘fuel debt’ – money owed for gas and electricity – are commonly known as Fuel Direct. Brits looking to clear their outstanding bills can also approach a supplier to arrange deductions that cover energy consumption.
The DWP continues: “Contact your supplier to set up deductions for your ongoing bills. They’ll need your consent to request this for you. You can give consent on the phone. It does not need to be in writing.
“Agree an amount with them that covers the cost of the energy you use. You can stop deductions for ongoing bills at any time. Contact the office that pays your benefit to request this.
“If you choose to stop making gas and electricity payments, contact your energy supplier to arrange a different way to pay. If you want to change the amount you pay, contact your supplier.
“If you owe money but cannot afford more deductions to your benefits, your supplier can tell you what help is available for people on low incomes. They may be able to arrange a different way for you to pay.”
Nevertheless, if you dispute the deductions taken from your benefits, you can ask for a mandatory reconsideration. You must make this request within one month of the financial decision and provide a ‘good reason’ for it.
This may include the following instances:
You disagree with the reasons for the decisionYou want to have the decision reviewed againYou believe there is an error or missed evidence in the decision made
“Some decisions cannot be reconsidered. Others can go straight to an appeal,” the DWP adds. “Your original decision letter will say if this applies to you.”
For further information, head to the DWP’s website.
