How third-party deductions work
Third-party deductions allow the client to pay their arrears (and some ongoing bills) straight from their benefit. Deductions can be taken from entitlement to universal credit (UC),1Guidance for third-party deductions from UC is available at income support (IS), income-based jobseeker’s allowance (JSA), income-related employment and support allowance (ESA) and pension credit (PC). In limited circumstances, deductions can be made from other benefits. See CPAG’s Welfare Benefits and Tax Credits Handbook for further information. Deductions can be made from the client’s benefits and paid to third parties to pay arrears of:2Reg 60 and Schs 6 and 7 UC,PIP,JSA&ESA(C&P) Regs •housing costs for specified mortgage arrears;
•rent;
•gas or electricity;
•water charges;
•council tax;
•child support maintenance;
•certain loans.
Deductions can also be made to pay:
•county court fines;
•debts to the DWP.
The deductions are made when the benefits are paid. Further deductions may be taken to cover future bills in some circumstances. A client cannot just opt to pay their ongoing fuel costs via their benefits unless they already have arrears with that supplier.
Deductions to third parties can only be made if the client or their partner is liable to make the payments.3Sch 9 para 2(1) SS(C&P) Regs; Sch 6 UC,PIP,JSA&ESA(C&P) Regs Deductions should only be made if there is evidence of liable – eg, the bill is in the client’s name. Third-party deductions can be used to pay multiple companies. However, if the total deductions are over 25 per cent of the benefit payment, it must be formally agreed. Third-party deductions cannot be used to pay an old supplier – eg, a previous landlord or energy provider. Only current suppliers can be paid in this way.
If any third-party deduction will cause hardship, the client can write to the DWP’s Debt Management department to ask for the deduction to be reduced, stopped or written off.