Benefit claimants have been alerted to a little-known rule that allows the Department for Work and Pensions (DWP) to reduce Universal Credit payments for those with savings between £6,000 and £16,000. For every £250 over the £6,000 threshold, £4.35 is deducted from monthly payments, with any remaining amount under £250 also incurring a £4.35 reduction.
The DWP provides examples on its website: Sam, with savings of £6,300, sees a reduction of £8.70 (2 x £4.35). Leeroy, with £14,500 in savings, loses £147.90 (34 x £4.35). Claimants are advised to monitor their savings to avoid unexpected cuts.
Beyond savings, failing to meet claimant commitment requirements can lead to sanctions. In May 2025, 5.3% of applicable claimants were penalised – around 111,300 individuals. Between February 2024 and April 2025, the DWP issued 611,820 sanctions, with 550,000 for missing appointments or interviews.
Sanctions are categorised as low, medium, or high. Low-level sanctions, such as missing appointments, can be lifted by completing the requested activity. Medium-level sanctions, for not actively seeking work, last four weeks (13 weeks for repeat offences). High-level sanctions, for rejecting a job or misconduct, last between three and six months. Daily deduction rates range from £8.10 to £13.10 depending on age and household type, with a 40% reduction for 16 and 17-year-olds.
Claimants who disagree with a sanction can request a mandatory reconsideration via their Universal Credit account, phone, or in writing. Hardship payments, approximately 60% of the standard allowance, are available but must be repaid through future Universal Credit payments.
