For those who depend on benefits and Universal Credit payments to manage their daily expenses, unexpected deductions can lead to significant stress and financial hardship. It’s crucial to be aware of your rights and the mechanisms in place that can affect your benefits. Keep reading to find out what Third-Party Deductions are, how they work, and whether you can take any steps to stop them and ensure you remain fully supported and in control of your finances.
What Are Third-Party Deductions from Benefits?
If you fail to keep up with your household energy bills, council tax, or pay a court fine and are in receipt of benefits, the Department of Work and Pensions (DWP) reserves the right to collect money from you via your benefits. This is known as a third-party deduction and is a way to protect creditors from nonpayment by individuals on benefits. They can also be used by landlords to collect rent arrears, with official landlord guidance laying out when this can be put into practice.
Which Benefits Can Be Used for Third-Party Deductions?
The deductions from benefits DWP deems necessary can be taken from any or all of the following, depending on your individual circumstances:
Will I Be Charged Third Party Deductions?
If you are in arrears with everyday household outgoings, you are at risk of having third-party deductions applied to your benefit payments. You can check your third party deductions online to see what, if any, deductions are currently being applied.
It is important to note that just because you are not currently being debited does not mean that this will not change by the time of your next benefit payment. Landlords, in particular, have become increasingly determined to collect rent arrears in the quickest possible way in recent years.
How Are My Deductions Handled?
While full details on handling and processing can be found online, it’s important to provide reassurance that the process is legal and above board. It may feel like someone is taking control of your personal finances and taking what is rightfully yours, but this is not the case. Third-party deductions are only handled by the DWP – the third parties themselves never have access to your benefit accounts — and are designed to reclaim what creditors owe.
The process is robust, transparent, and fully documented in the comprehensive guidance for creditors resource which can be found online.
How Much Are Third-Party Deductions?
This will depend on how much you owe, who you owe it to, and how long you have been in arrears. To prevent those on benefits from falling into financial hardship, the following key steps have been taken as part of the legislation:
- No more than 3 third-party deductions can be taken from each benefit payment
- Universal Credit recipients will see 5% deducted for each debt owed
- Rental arrears are reclaimed at between 10 and 20% to help small landlords
- If you receive other benefits, £4.55 a week is deducted
If you feel that the level of deductions will make it difficult to live comfortably, there is advice available when facing hardship. Reaching out quickly will give you the best possible chance of making arrangements to protect you from hardship.
How Do I Stop Third-Party Deductions?
If you want to know how to stop third-party deductions from Universal Credit then the best approach is to call directly on 0800 328 5644. Before making your call, it is important to have all of the following to hand:
- Your NI number so that the call handler can view your current situation
- Answers to any security questions, along with your name, address, and date of birth
- The reason you want to stop or reduce the third-party deductions — the more detail the better
The key point here is that while you can argue your case and say that you don’t owe anything, proof is always better. There are cases where third-party deductions continue in error after the debt has been repaid in full. Keeping a written account of everything that has been paid will allow you to quickly highlight if and when such an error has occurred.
Paying Back What You Owe
Third-party deductions allow energy companies, landlords, and finance companies to reclaim what they are owed by someone on benefits or Universal Credit. A third-party will never have access to your account — this is handled by the DWP — and there are limits in place on how much money can be deducted each month.
FAQ’s
1. Who do I talk to about costly third-party deductions?
The DWP third party deductions contact number is: 0800 328 5644. There is a list of details you will need to have to hand when making your call in the previous section of this guide.
2. How long will I have to pay third party deductions?
This depends on the size and nature of your debt. If at all possible, looking to increase your income or amass savings so you can pay off a significant portion of the debt will help improve your financial situation quicker.
3. What happens if I refuse to pay my third party deductions?
Because they are taken directly from your benefits before they enter your account, it is not possible to stop them from being taken. If you feel you are being wrongly debited or are facing undue hardship, calling 0800 328 5644 is the fastest way to put things right.
