The changes to Universal Credit had been introduced in the Budget, and will see the “repayment cap” lowered from the present 40 p.c most. This transfer comes shortly after it was revealed 850,000 individuals lose a part of their Universal Credit paying again debt or superior payments. Of the 850,000, near half had 20 p.c taken off their payments, whereas almost a 3rd 238,000 noticed deductions of 31-40 p.c. However in excellent news for claimants, the altering to the “repayment cap” means some recipients will hold extra of their cash.
What is the Universal Credit “repayment cap”?
This is the utmost quantity the DWP can deduct from profit payments to pay again hire arrears, superior payments or sanctions.
Advanced payments are provided to new claimants of Universal Credit who’re struggling financially whereas they wait for his or her first fee – typically a interval of 5 weeks.
The superior fee is an curiosity free mortgage which should be paid again in instalments from future Universal Credit payments.
Deductions start on the primary day of fee and should be paid again inside 12 months besides in “exceptional circumstances”.
Under present guidelines, these repaying a complicated fee will see a deduction of 15 p.c in month-to-month payments.
What is altering beneath the brand new regulation?
Those affected by a mix of repayments – hire arrears and/or sanctions alongside superior payments – will see the quantity they obtain change.
Currently, the DWP an take deductions of as much as 40 p.c of the month-to-month normal allowance of Universal Credit.
From October 2, the “repayment cap” will be lowered to 30 p.c. This means these paying the utmost ought to obtain more cash every month from October 2.
The DWP have confirmed the change will have an effect on each present and new claimants of Universal Credit.
However, those that solely repay their advance fee will not see the quantity the obtain change, because the compensation threshold will stay at round 15 p.c in these instances.
In all instances, fees and repayments should be paid inside a 12 month interval, however the DWP has beforehand stated this may be prolonged to 16 months – however not till October 2021.
Who is eligible for Universal Credit?
Universal Credit is a fee which can be made in order to assist with dwelling prices.
It replaces six sorts of advantages, referred to as legacy advantages. These are Child Tax Credit, Housing Benefit, Income Support, revenue-primarily based Jobseeker’s Allowance (JSA), revenue-associated Employment and Support Allowance (ESA), and Working Tax Credit.
Those who get the extreme incapacity premium, or are entitled to it, or received or had been entitled to it in the final month and remains to be eligible for it, can not declare Universal Credit.