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deductions from UC

dizzymare
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Welfare benefits adviser - Dudley MBC

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brain is boggled! we are not currently in a full service area so my UC knowledge is a bit sketchy. We do go to full service next week.

I am trying to get to grips with the rules around third party deductions and managed payments to landlords. We have a situation where a managed payment for housing costs is only being paid at 50%. We are told that this is because there are other deductions (which I assume may be for fines/utilities etc but we don’t know exactly.). I thought that the housing costs would be paid to LL and that other direct deductions (which relate to arrears) could only be deducted as no more than 3 items, and that deductions for fuel/water could not be more than 25% of standard allowance and any child element and that other arrears for rent, fines etc could be taken without consent but that this could not be more than 40% of standard allowance, unless in claimants best interest.  Im a bit confused as to why the housing costs element would be affected when the reference seems to be to the standard allowance and not the maximum amount? can anyone please explain this (im sure im probably muddling up bits of different guidance so would welcome some clarification)

thank you all

SarahJBatty
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Deductions can be up to 40% of the ‘amount of the personal allowance’. 
So in a case where there is other income such as earnings, then deductions can be taken from whatever UC is in pay as a top up to this income, up to the amount of the personal allowance.  The personal allowance is not a benefit in its own right with housing costs a separate benefit, they are just amounts in the calculation of UC and the deductions are taken from that UC.
This will certainly affect an APA to landlord for rent.

Hope this helps.

The other possibility is that the housing costs element in the calculation is wrong, or there is a shortfall between the housing costs element payable and the actual rent - I am sure you will have looked at these possibilitis though.

Sally63
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Generalist Adviser, Southwark Citizens Advice Bureau

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You should be able to find details of the deductions on the client’s journal.

The payments page will say that the details are published in the journal but IME they are not.

However if you point this out, you should get a response including a list of what the deductions are for. I also got an apology but that was probably a mistake

dizzymare
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Thank you both. This has come from our income team who have been told that there are other deductions, but not what for. As far as we know, the HC element is correct, but I will ask for a copy of the award if possible, and ask the claimant to check the journal for the breakdown - so thank you for that suggestion.

Im still a little confused as I didn’t think the term personal allowance referred to UC - so what is this made up of?. I can see standard allowance - an amount for an individual or couple, then amounts for children, disability elements etc.  this is the maximum amount. adjustments for earnings/work allowance/taper and unearned income etc then gives the total due.

When I checked the regs, they referred to maximum deductions of 25% or 40% (depending on type of deduction) of the standard allowance +child element but I couldn’t see anything about the from the total due. I know I am being dim but I need to understand how this works. Just to confuse matters DWP guidance refers to 40%of the standard allowance (maximum amount) - so which is it?

Can someone post a sample calculation showing how the deductions work please? (dummies guide to UC)

thank you again

HB Anorak
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The reference to the standard allowance is just a way of specifying in legislation the maximum amount of deductions from the generic UC award.  It is future proof and saves them having to amend Schedule 6 to the Claims and Payments Regs every time the allowances are uprated; it also saves them having to specify different amounts for couples/singles of different ages.

In plain English it is saying that the maximum deduction for third party debts for a single claimant over 25 is about £127 a month, or just under £80 a month for certain debts.  These sums are not being deducted from any particular element, they are being deducted from the UC award as a whole.

Here is an example where there is an earnings taper.  The claimant is a housing association tenant paying £430 a month, no bedroom tax, full rent eligible.  Single person over 25.

Max UC is (430 + 317.82) = 747.82
Earnings £800 a month, taper (800 x 63%) = £504
UC award £243.82.  This is not for any precisely defined purpose: it’s just some money (“smoothie”, to rip off Housing Systems’ excellent image)

Claimant has rent arrears and a third party deduction is being made.  The limit is 40% of £317.82: about £127.  This leaves about £116-odd of UC, which may or may not be paid to the landlord as a managed payment (MPTL): that would be a separate decision.  If you are thinking “but that leaves the claimant without any UC: they’ve taken the whole award”, don’t forget they earn £800 a month.  This claimant only qualifies for UC at all because of their housing costs so if an MPTL is appropriate in the first place it makes sense to send every penny of UC to the landlord where the amount available is less than the full rent.

Make sense? 

dizzymare
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Welfare benefits adviser - Dudley MBC

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brilliant - plain and simple.  I was thinking of it as two separate transactions. so HC paid to LL but up to 40% of deductions from standard allowance only could be taken. The calculation shows perfectly how it works so thank you for that.

One last question, if there are other debts for example a court fine and CT arrears, do they then split payments or pay MPTL first and see if anything is left?

BC Welfare Rights
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https://www.gov.uk/government/publications/how-to-request-deductions-from-benefit-a-guide-for-creditors/third-party-deductions-from-benefits-a-guide-for-landlords-rent-arrears-and-service-charges

Debts covered by the scheme
The types of debt covered by the scheme are rated in a priority order. This reflects the degree of risk to the individual or their family by the enforcement action that may result from non-payment. The order is:

housing costs for specific mortgage arrears
miscellaneous accommodation costs; care homes, private hospitals
hostel charges
rent arrears including service charges
mains fuel costs; gas and electricity
water charges, water then sewerage if two debts
Council Tax and community charge arrears
fines
Child Support Maintenance under the old scheme
refugee integration loans
eligible loans

dizzymare
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Welfare benefits adviser - Dudley MBC

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thank you again for all your help

zoeycorker
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Welfare Rights Unit - Leeds City Council

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we’ve just had this come through to try and help explain the payment cycles to landlords as arrears payments come through separately to actual housing costs.

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WillH
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On the subject of third party deductions. Some cannot commence or recommence if there is earned income higher than the work allowance - owner occupier housing costs arrears, rent arrears, fuel and water rates, I think. (Sched 6 of C&P Regs).

The C&P regs refer to the UC regs, reg 22(2). But there of course, only two types of client now have a work allowance, those with children, and those with limited capability for work.

ADM Chapter D2 doesn’t really help:
‘In relation to any claimant, work allowance means the amount applicable to that
claimant under specified legislation’.

Apologies if this has been raised before, but I’m guessing this doesn’t mean that if someone has no work allowance, these deductions stop if they have any earned income…?

But if there IS a work allowance, deductions could stop were they to earn more than the work allowance.
.

WillH
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Take rent arrears - the deduction is supposed to stop if earned income equals or exceeds the work allowance for 3 APs. (C&P Regs, Sched 6, para 7(7)).

ADM D2124 just repeats that really. So what if there’s no work allowance….you still have the deduction? But if you happen to be a parent/have LCW, it stops (which in itself could be an issue if you’re not aware that’s happening).

Does anyone know?

zoeycorker
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I’m jumping on this bandwagon rather than starting a new thread
and I’m currently seething about this at the minute

so I have a customer in a live service area - Sheffield - who is on an APA - and we receive 10% deductions for arrears - so far so good (but not because the figures are wring to start with - but that’s by the by at the moment)

he has been sanctioned - and as a result of his sanction - for some reason his housing element payment has reduced….
couldn’t figure it out and when I spoke to UC they said its because of the sanction

apparently they can take the arrears deduction amount OUT of the normal housing cost payment - to pay for the arrears

??????
anyone else see the problem here or is it just me?
bearing in mind this customer is at risk of losing his tenancy due to rent arrears

can anyone tell me what the regs say in respect of this?

ROBBO
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Don’t know what the regs say, but this is genius work from UC.

 

AdviceShop
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Hi,

The sanction will be for the equivalent amount of the personal allowance but they can take it from the whole award.  That maybe doesn’t sound very clear - a client I was working with (also live service area) was working part-time and in receipt of UC.  She was sanctioned so the deduction of £317.82 ate into most of her housing element as her personal allowance was only approx. £50 per month due to her earnings. 

UC don’t differentiate between the different elements when applying the sanction so if they are not receiving the full personal allowance amount, it will eat into the other elements. 

I hope that makes sense.

HB Anorak
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Well, we are back to the smoothie again aren’t we.  He has a UC award: a single generic sum of money.  Before the sanction, some of it was being diverted at source to you to cover both current rent payments and a bit off the arrears as well - think of it as the smoothie being poured into two cups, one for him and one for you.  The sanction has reduced the total volume of smoothie in the jug, and DWP has looked at it and thought “Hmmm.  If we fill a cup for JJHT there won’t be a lot left will there.  He’ll get pretty thirsty.  So lets not put quite so much in JJHT’s cup”.  So yes this is perfectly legal: under the C&P Regs DWP has absolute discretion whether and if so how much of a claimant’s UC it pays to a third party, subject only to the 40% limit on debt payments.  I think it’s slightly artificial to say that some of the APA for current rent has been diverted to the third party debt deduction for arrears - it probably looks like that on DWP’s system, but the reality is there just isn’t quite as much smoothie in your cup so the arrears balance won’t be coming down (and might even be going up).

It’s all the same to you isn’t it: if he pays £10 off the arrears by leaving this week’s rent £10 short, or if he pays this week’s rent in full and misses an instalment off the arrears - the difference is academic, unpaid current rent has exactly the same effect as unpaid arrears instalments.  He still owes yo the same amount of money either way.

Please shoot me down if this seems a naive thing to say, but his tenancy is only at risk if you evict him isn’t it?  If you can see that he is in an impossible position, don’t evict him!

zoeycorker
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that does make sense - but he has only been sanctioned his personal allowance as this is his only income - not any of his housing element
what they’ve done is take the arrears deduction from his housing element - so they’ve reduced what they pay to his rent by £31.70 and paid us the £31.70 as the arrears amount

just seen the second post - but that is exactly what they’ve done - however I’ve not come across this before - normally when a sanction is applied we just don’t get the arrears deduction for that month - but what they’ve done in Sheffield is take it out and pay it separately

[ Edited: 15 Dec 2017 at 03:59 pm by zoeycorker ]
HB Anorak
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... which is completely pointless right? - Just means you get £31.70 less than before!

Timothy Seaside
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I realise I’m a bit late to this party, but…

I didn’t think rent arrears deductions could make any difference to a claimant receiving their full housing costs. Looking at Schedule 6 of the UC, PIP, JSA & ESA (C&P) Regs 2013, it looks like this to me:-

I feel like I’m on fairly safe ground if I say the maximum aggregated deduction is 40% of the standard allowance.

So if a claimant isn’t working, they will have the buffer of 60% of their personal allowance so the housing costs aren’t affected.

If they’re being sanctioned then they’ll already be exceeding the 40%, so under Para 4, the DWP can’t deduct anything else.

If a claimant is working then the regulations say that certain third party debt deductions stop if their earnings exceed the work allowance. These are deductions for housing costs (Para 6), rent (Para 7), fuel costs (Para 8), and water charges (Para 9). So there are only deductions if they’re earning less than the work allowance; in which case they’d be getting the full standard allowance, and have the 60% buffer.

So I would think what zoeycorker is saying is right: if a sanction is applied, there shouldn’t be an arrears deduction for that month under Para 4.

Also, I can’t see how Para 7 allows the DWP to deduct 10% for rent arrears - it says 5%.

Am I missing something?

Timothy Seaside
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WillH - 21 November 2017 11:39 AM

Take rent arrears - the deduction is supposed to stop if earned income equals or exceeds the work allowance for 3 APs. (C&P Regs, Sched 6, para 7(7)).

ADM D2124 just repeats that really. So what if there’s no work allowance….you still have the deduction? But if you happen to be a parent/have LCW, it stops (which in itself could be an issue if you’re not aware that’s happening).

Does anyone know?

It’s Universal Credit, of course nobody knows!

In Para 1 of Sch 6, “work allowance” is defined as the amount applicable to that claimant under Reg 22 of the UC Regs. So if the amount applicable to that claimant under Reg 22 is zero, the work allowance is zero. That’s what I’d argue.

[ Edited: 11 Oct 2018 at 05:27 pm by Timothy Seaside ]