Universal Credit explained: 6 reasons why your payments could be stopped or reduced | Personal Finance | Finance

As the cost of living crisis continues and inflation sits at nine percent, any changes to payments could be crucial to families on low incomes. Over six million households in the UK claim Universal Credit so it’s important for people to know why their money could be reduced or stopped.

How much people can claim can be complicated to work out, as it depends on individual circumstances.

This includes everything from your living arrangements, employment status and any income and savings they have.

These circumstances are then assessed every month, which means Universal Credit payments can change each month. Some months people may get more, or less.

There are some very specific reasons why someone’s money could be reduced or temporarily stopped – and it’s important people are aware of these so they can plan for any changes in their payments.

READ MORE: Britons could get extra cash outside of £150 council tax rebate – are you eligible?

These reasons are:

  • You’ve earned more money from work

For every £1 one may earn, their Universal payment reduces by 55p – this is known as the taper rate.

The more someone earns from their work, the less Universal Credit they will receive.

  • You’ve reported a change in circumstances

If someone moves homes, or gets a new job or they’ve inherited any money, it is important to let Universal Credit know of any changes as soon as possible so they are not overpaid or underpaid.


A full list of what counts as a change in circumstance is available on the gov.uk website.

  • You owe Universal Credit money

If someone has taken out an advance payment, hardship payment or budgeting advance, then this will come out of their future Universal Credit payments.

That’s because these are all technically loans, so they need to be paid back.

  • You’ve been sanctioned by the DWP

To claim Universal Credit, people will need to agree to complete various tasks such as looking for work and attending JobCentre interviews.

  • You’ve been paid too much Universal Credit

The DWP will reduce any future Universal Credit payments if they believe they have overpaid someone.

People can report an overpayment by signing into their Universal Credit account or calling the Universal Credit helpline.

  • You’re paying back debt

People may get a “third party deduction” applied to their Universal Credit if they are in debt to someone else.

People will only get a deduction if the creditor asks the DWP. The dedication is usually five percent of one’s basic standard allowance, although it could be more.

Deductions can only be made for:
– Rent arrears and other housing costs like service charges – the deduction can be between 10 percent and 20 percent for rent arrears
– Gas, electric or water arrears
– Council tax bills arrears
– Child support maintenance
– Some loans
– Some fines.

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