Our members have been awaiting the news that deductions for advances and debts were to be reduced and today, all Gov.UK pages updated to clarify that only 30% can now be deducted (previously 40%).
That could mean that UC payments go up for a lot of claimants, while debts are paid back at a slower rate.
A single person, 25 or over, could be paying back £31.76 less per month
A couple, 25 or over could be paying back £49.89 less per month
A single person, under 25, could be paying back £25.18 less per month
A couple, under 25, could be paying back £39.52 less per month
This will apply for new claimants and existing claimants.
People on Universal Credit end up in a situation where they pay back money direct from their monthly payment because they need to take an advance during their long wait for first payment. Many claimants have no other source, or very little income, while they wait 1 month and 7 days for first payment.
Many claimants as well, move onto Universal Credit and HMRC recalculates old tax credit payments, as far back as 10 years+ looking for amounts that were overpaid. Often the claimant had no prior knowledge of these amounts and it was through no fault of their own.
The new maximum amounts for repayments of advances and ordinary debts is as follows -
A single person, 25 or over, £95.35
A couple, 25 or over, £149.67
A single person, under 25, £75.53
A couple, under 25, £118.56
SO IS THIS AS GOOD AS IT SOUNDS????
At Universal Credit Essentials, we are always a little dubious when we hear rumours of things that are planned to happen, in favour of the claimant. When reducing debts and overpayments was first suggested, they also said that advance repayments would be collected over the extended period of 16 months. So far, no guidance or information has been changed to say that is happening.
This looks like new claim advance amounts will be capped at an even lower amount offered, so that repayments can be collected within the 12 scheduled payments. Unless they make further changes immediately, some new claimants will have access to much lower amounts of advance than previously.
A new claim advance is calculated to be equal to 100% of monthly payment of UC, before deductions BUT capped at what can be collected in repayments within the time frame - 'affordability'.
Judging by the info we have been able to source today, the affordability amounts will be drastically lower.
The maximum advance any of the following groups can be offered, if their circumstances allowed will be -
Single person, under 25 - £1208.50, now £906.37
Single person, 25 or over - £1525.54, now £1144.15
Couple, under 25 - £1895.96, now £1422.72
Couple, 25 or over - £2394.67, now £1796.00
These may sound like substantial amounts, but people will only be offered these amounts, if their circumstances would allow full payment of benefit at this amount, or above, if they had no deductions.
Many families will find it very difficult to survive one month and 7 days until first payment, while expected to pay rent, electric and gas, food possibly even childcare bills.
Read more about....
NEW CLAIM ADVANCES
DEDUCTIONS FOR ADVANCES AND DEBTS