Universal Credit sanction: Hardship payments can help with lower income | Personal Finance

Universal Credit is designed to support those in financial hardships but it should always be lower than what could be received in full employment.

Because of this, claimants are expected to seek work as much as reasonably possible.

If a claimant fails in their duties without a reasonable reason they could face sanctions which will result in payments being reduced.

If a sanction is given, there is a procedure in place to have the decision reconsidered or possibly appealed.

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The severity of the sanctions will depend on the claimants actions but in extreme cases payments could be stopped entirely.

In these situations, the claimant is not left entirely without options.

If the claimant struggles to cover household expenses like food and bills because of these sanctions they can apply for emergency funding.

This funding is called a hardship payment and it is a loan from the government that has to be paid back.

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Income

The state can alter how much income is received from Universal Credit (Image: GETTY)

Job search

Universal Credit claimants are expected to seek work where possible (Image: GETTY)

If this loan is given, it will have to be paid back when the sanction ends.

It is usually paid back through future Universal Credit payments, meaning careful consideration should be given before applying.

Income received following this loan will likely be lower than expected

If the claimant does want to move forward, they will need to contact the Universal Credit helpline.

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There are strict rules in place to determine who can receive hardship payments.

The claimant must be at least 18 years old, they must be struggling to meet basic needs for themselves or a child they’re responsible for, every effort must be made to ensure money is not spent on non-essential things.

The claimant needs to try and receive money from other sources before turning to this option and all work related activities commitments must be done in the seven days leading up to the application.

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Evidence for all of this will also need to be given when making the application.

The amount received from the hardship payment will vary for each individual claimant.

The payment will roughly be 60 percent of the amount that the person was sanctioned by in the previous month.

Repayments will start immediately in the following month, with the Department for Work and Pensions deciding how quickly it will be repaid.

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Repayments

Repayments will come from Universal Credit income (Image: GETTY)

The repayments will be taken from reduced Universal Credit payments. 

These reductions will be between 15 and 25 percent of the basic allowance.

This basic allowance is the same for all universal claimants, it does now include the extra amounts from additional elements such as childcare.

So, for example, if the Universal Credit payment is reduced by 15 percent of the annual allowance, which is usually £317.82 a month, than the total payment will be reduced by £47.67.