THIRD PARTY DEDUCTION SCHEME: The facilities allow your benefit payments to help pay off your utility bills and rent.
They are sometimes referred to as the Fuel Direct scheme. The aim is to use benefits to assist claimants who are having difficulties.
How to Apply for Third Party Deductions
The office will then contact the person or the organisation that you owe money to. They will inform them that you will be starting third party deductions from benefit.
They will help you set up the scheme and explain how and when the bill payments will take place. Personal information that you will need includes:
- Your customer reference number (used when paying bills).
- Your National Insurance number.
- The details of which organisation you owe money to and how much.
Taking Third Party Deductions from Benefits
A list of benefits which may get used to pay off household bills includes:
- Income Support
- Income-based Jobseeker’s Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Pension Credit
- Universal Credit
Important: Another help guide explains how to notify the DWP about a ‘Breathing Space’ starting or ending, if covered by the Debt Respite Scheme.
Deductions from Universal Credit
As a rule, the type of bill you are paying off will determine the amount of the deduction. Either way, if you get Universal Credit the amount deducted will be:
- 5% for most utilities (e.g. electricity, gas, and water).
- Between 5% and £108.35 per month to pay off fines.
- Between 10% and 20% for rental payments.
Note: The deductions can pay off electricity, gas, and water bills at the same time as paying back a debt. It will stop once you pay back the amount that you owe.
Deductions from other Benefits
Deductions get made each time your benefits get paid. An amount of £3.70 gets deducted from each benefit to pay off the debt you owe. There is also an extra amount to cover your bills in future. The Jobcentre Plus, or your pension centre, will determine the extra amount.
They will ask you to agree if the amount will be more than 25% of your benefits (including Child Tax Credits). The deduction can get made without your agreement if it is less than 25% but they will inform you either way.
When You Cannot Use Benefits
You cannot use the third party deduction scheme to pay:
- A debt with a previous landlord or a previous supplier (only the current one).
- More than three (3) types of debt. Some exceptions apply for paying more than three current bills.
Extra Help to Pay Fuel Bills
Some financial help is also available through the coldest months in the United Kingdom. Check to see whether you qualify for:
- Cold Weather Payment
- Winter Fuel Payment
- Warm Home Discount scheme (a £140 discount for some claimants on Pension Credit or in low-income households)
Final Demands: Third Party Deductions
As a rule, you should not get a final demand while using the benefits deductions scheme. But, you might get one by mistake. If so, contact Jobcentre Plus (or your pension centre).