The deductions

• Rent/service charges arrears
• Council tax arrears
• Utility arrears
• Court fines
• Child maintenance
• Water Direct

Rent/service charges arrears

If a landlord informs the DWP that a client on UC has rent/service charges arrears, an amount can be deducted monthly from ongoing UC payments until the balance is cleared. This is to prevent eviction and should only be used when other attempts at negotiating payment have failed.

There is a maximum and minimum deduction rate for rent arrears. The amount taken varies depending on other deductions that are being made. A rent arrears deduction can be a maximum of 20 per cent of the standard allowance or as low as 10 per cent of the standard allowance if other deductions are being taken. The amount of no less than 10 per cent and no more than 20 per cent will be reduced by any other deductions being made from the UC award. If there is insufficient UC in payment to take the full 10 per cent minimum, nothing is deducted.

Council tax arrears

Deductions for council tax arrears can be made from UC, IS, JSA, ESA or PC if the local authority gets a summary warrant or decree from a sheriff court and applies to the DWP for recovery to be made in this way. Deductions can be made for arrears and any unpaid costs or penalties imposed.

Council tax arrears cannot be deducted if the client already has 25 per cent of their standard allowance deducted.

See CPAG’s Council Tax Handbook for help with council tax arrears.

Utility arrears

If the client owes money to their current mains gas or electricity supplier, the company can request that an amount be deducted from the client’s ongoing UC payments for the normal usage amount and arrears. This is to prevent disconnection of service. It stops when the arrears are cleared. If the client has a prepayment meter, they can only take an amount for arrears.

For UC, the amount deducted for arrears of gas, electricity and water is 5 per cent of the standard allowance. For IS, income-based JSA, income-related ESA and PC, an amount can be deducted each week and paid to the supplier in instalments – usually once a quarter.1Sch 9 para 6 SS(C&P) Regs

The amount allocated for normal usage is set by the supplier and cannot be more that 25 per cent of the client’s standard allowance and child element unless the client agrees in advance.

 

1     Sch 9 para 6 SS(C&P) Regs »

Court fines

Any court in Scotland can apply to the DWP for a fine, costs or compensation order to be deducted from UC, IS, JSA, ESA or PC.1F(DIS) Regs

For UC, the maximum amount that can be taken is 5 per cent of the standard allowance. Court fines cannot be deducted if clients are already having 25 per cent of their standard allowance deducted.

 

1     F(DIS) Regs »

Child maintenance

Deductions for ongoing child maintenance are not part of the third-party deduction scheme, although arrears for child maintenance are, and can be deducted from UC payments if the client is a non-resident parent and has no earned income. It can only be taken if the Child Maintenance Service requests the payment directly from the client’s benefit. Child maintenance cannot be deducted if the client already has 25 per cent of their standard allowance deducted. This can be a complex area and advisers should get help from a benefits specialist if unsure.

Water Direct

Clients should be aware that even with a 100 per cent council tax reduction, they are still liable to pay at least 75 per cent of their water charges. Water Direct allows debts and current charges for water use to be paid through deductions to the client’s benefits.

The scheme can protect a client from increasing debt through water and sewerage charges going to summary warrant. The scheme does not require court action and so avoids statutory additions from being added to the debt.

For more information, see here.