More than a quarter of the two million people claiming Universal Credit are having deductions taken from their monthly payments to cover tax credit overpayments.
Benefits payments have been slashed for 570,000 people who have moved on to the controversial system with an average debt of £610 while some are facing debts up to £1,560, according to government figures.
In order to recoup overpayment of the income-based credits, benefits chiefs can take away 15 per cent of payments or 25 per cent for people in work, amounting to around £47.67 for a single person over 25.
Half of the people we help while waiting for their initial payment are unable to keep up with bills or rent – so any deductions can push people over the edge
That was the reality for one in five claimants last month with 410,000 losing cash, which will continue until the debt is repaid. And claimants often only find out about the debt when they apply for Universal Credit.
Gillian Guy, chief executive of Citizens Advice, has warned the government that the debt collection could leave people living on an unsustainable amount.
“Deductions can be made to repay previous overpayment debts, but these can be from years ago and often come as a surprise,” she said. “They can also come on top of other deductions leaving some people unable to cover their essential costs.
