Millions of Universal Credit recipients are facing substantial reductions in their support, with average annual losses reaching up to £624. Recent data from the Department for Work and Pensions (DWP) reveals that more than 3.1 million households had one or more deductions applied to their Universal Credit payments in August 2025.
On average, claimants are losing about £52 each month because of automatic deductions. These deductions arise for several reasons, explained Conor Lawlor, benefits expert at Turn2us.
“Debts can accumulate in various ways, including overpayments of Universal Credit and other benefits — even if the overpayment was an error on the DWP’s part — benefit advances, and recovery of hardship payments,” Lawlor said.
The DWP may also make deductions to repay debts to third parties, such as rent and service charge arrears, council tax owed, court fines, child maintenance payments, or utility bills for electricity, gas, and water.
Universal Credit deductions fall into six categories:
- Advance payments — optional loans claimants can request if they lack enough funds before their first payment. These must be repaid.
- Budgeting Advances — interest-free loans available to cover essential expenses like household furniture, equipment, or clothing.
- Overpayments — when claimants receive more benefits than they are entitled to, resulting in repayment obligations.
- Fraud penalties and sanctions — reductions applied to the standard allowance for cases of fraud or breaches of benefit conditions.
- Third-party deductions — payments made directly from Universal Credit to creditors like landlords or utility providers.
- Direct Earnings Attachments (DEA) — where wages are garnished to repay benefit overpayments.
These deductions mean many claimants must manage their budgets with significantly less income, which can add financial pressure for those already facing hardship.