A major change to Universal Credit will come into effect next week, giving 1.2 million households a financial boost of up to £420 per year.
The Department for Work and Pensions (DWP) is set to lower the cap on the maximum level of deductions that can be taken from a claimant's benefit payments from April 30.
This significant adjustment will reduce the maximum deductions from a claimant's Universal Credit personal allowance from 25 per cent to 15 per cent.
In a statement, the DWP stated: "This is a positive measure to ensure that people on the lowest incomes can keep more of their Universal Credit.
The DWP is alerting people to how they could benefit from a rule change to the maximum deductions to a claimant's Universal Credit
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"This will have an impact on creditors as less money will be given to them through deductions in benefit."
Once implemented, the DWP change is projected to benefit 1.2 million households across the country.
Among those benefiting will be 700,000 families with children.
The reduction in the maximum deduction rate will boost household incomes by up to £420 a year.
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PAConor Lawlor, a benefits expert at charity Turn2us, outlined how these debts can accumulate over the years.
He explainde: "These debts can accrue in several ways, including for Universal Credit and other benefit overpayments (even if the overpayment was made in error by DWP), benefit advances and recovering hardship payments."
The DWP can also make deductions on behalf of third parties when claimants are in debt to them.
These third-party deductions can include rent and service charge arrears, council tax arrears, and court fines.
Child maintenance payments may also be deducted directly from Universal Credit.
Utility bills such as electricity, gas and water can likewise be recovered through benefit deductions.
LATEST DEVELOPMENTS:
Universal Credit payments are changing GETTYUniversal Credit standard allowance is paid at different rates depending on age and circumstances. Single claimants under 25 receive £316.98 per month, while those 25 or over get £400.14.
Joint claimants both under 25 are paid £497.55 monthly, and couples where at least one person is 25 or over receive £628.10. The impact of the change is significant for individual budgets.
For example, a single person under 25 facing a 25 per cent deduction currently loses £79.25 monthly, leaving them with £237.73.
Under the new 15 per cent cap, they would lose only £47.55 per month - £31.70 less - resulting in a payment of £269.43. This difference adds up to approximately £380 more per year for affected claimants.
