DWP decision to deduct more than 15% of a claimant's UC standard allowance

You can use this template if all of the following apply:

• your client has deductions from their UC award which exceed 15% of their standard allowance (15% rate applies from 30/04/25)
• your client has asked that the deductions be reduced, and this has been refused
• your client is experiencing financial hardship as a result of the deductions

This template assumes (so can be changed):

• your client has deductions from their UC award for rent arrears, a tax credit overpayment, four budgeting advances and a change of circumstances advance
• please contact CPAG for assistance including if your client does not have all / has different deductions than detailed in the template. There is an index to the letter at end of the document, you may find it useful to look at this first to see how the letter is structured and what changes you will need to make. Note that when you have finished, you need to update the index to include page numbers.

Do not use if the following apply:

• your client's deductions exceed 15% because they are for ongoing fuel, water or rent
• your client is experiencing hardship , which has been explained to the DWP, but their deductions total less than 15%. In this case, contact [email protected] as DWP have discretion to reduce total deductions to less than 15% of the standard allowance. Peter Schofield confirmed on 11/01/23 to the House of Commons Work and Pensions Committee – Oral evidence on DWP’s Annual Report and Accounts 2021-22, that if a claimant is experiencing hardship, and requests a reduced percentage to payback, this will be granted. 
   

The main legal arguments in this template are:

• This template challenges DWP’s failure to reduce deductions from a claimant’s universal credit award for UC advances (not new claim advance), rent arrears and a tax credit overpayment, when the  total deductions exceed 15% of the claimant’s standard allowance.
• Regulation reg. 11 Social Security (Overpayments and Recovery) Regulations 2013 (SS (OR) Regs), sets maximum recovery rates for ‘recoverable amounts’, i.e., money owed by the claimant, and regulation 3(b) confirms recoverable amounts include amounts under s. 71ZG Social Security Administration Act 1992 (which are payments on account of benefit made under s. 5(1)(r) Social Security Act 1998 including advances, budgeting advances and budgeting advances for employment).
• Schedules 6, para 7 Universal Credit etc (Claims and Payments) Regulations 2013 (UC (CP) Regs) allows the DWP to deduct an amount from a person’s UC standard allowance to cover rent arrears and pay this direct to the person’s landlord.
• Under section. 28(1)(b) of the Tax Credits Act 2002 an overpayment of tax credits may be treated and recovered by the DWP as an overpayment of UC.
• Schedule 6, para 4(1) of the UC (CP) Regs limits the total level of deductions to a maximum of 40% of the standard allowance. DWP policy, demonstrated by guidance, reduces this to 15%.
• To deduct more than 15% fails to apply DWP guidance and is unlawful.
• Further DWP guidance ‘Advances - Budgeting Advance’, and ‘Advances- Change of Circumstances’ fail to reflect the legal position under reg. 11(2) SS (OP) Regs, and DWP decision making in reliance on this guidance unlawfully fetters DWP’s discretion.

Information about your client:

• name
• address
• national insurance number (NINo)
• date of birth 

Background facts relating to your client:

• household / family
• disability / capacity issues  
• any other benefits or earnings your client receives  
• when they made their claim for UC and why  
• exactly what deductions are being made and the balances of any money owed
• details of your client's financial hardship, any risk they will be unable to pay their rent or fuel bills, or need to visit a food bank

Information relating to the decision 

• the date and how your client reported their financial hardship to the DWP and asked for the rate of deductions to be reduced
• what evidence your client provided to support their request
• the date, and how, DWP responded, ideally including a quote from your client’s UC journal

We've created this guide to help you successfully use our judicial review pre-action letter templates: Guide to using CPAG's judicial review pre-action letter templates

Once you've finished your letter, please email it to us at: [email protected] before you send it to the lawyers acting for DWP/HMRC/your local authority. We'll try to reply as quickly as possible and will do so within 7 days.