Guidance

A guide for local authorities – arrears of Council Tax

Updated 3 November 2023

© Crown copyright 2023

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This publication is available at https://www.gov.uk/government/publications/how-to-request-deductions-from-benefit-a-guide-for-creditors/third-party-deductions-from-benefits-a-guide-for-local-authorities-arrears-of-council-tax

1. What is a third party deduction (Purpose)

The third party deduction scheme is designed to protect claimants in receipt of benefits. It is used when a claimant has arrears of essential household outgoings and has failed to budget for these bills. Other methods to recover the debt must have been tried, for example negotiating different ways of paying and managing bills. There must be a threat of enforcement action before consideration is given to applying for a deduction.

The billing or levying authority may request deductions for arrears of Council Tax covered in a liability order in England and Wales and a summary warrant or a decree in Scotland.

2. Why a third party deduction is taken (Value)

Third party deductions act as a safety-net to protect claimants who have debts for essential household bills or to ensure compliance with a social and financial obligation.

The following benefits may have a third party deduction:

3. How the scheme works

We deduct a fixed amount to clear the arrears. This is legislated for in Schedule 9 to the Social Security (Claims and Payments) Regulations 1987. The amount is deducted from the individual’s benefit at source and paid directly to the creditor until the debt is cleared.

Where there is more than one debt, we can take a maximum of 3 deductions at any one time.

4. Debts covered by the scheme

The types of debts 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:

1. housing costs for specific mortgage arrears

2. miscellaneous accommodation costs; care homes, private hospitals

3. hostel charges

4. rent arrears, including service charges

5. mains fuel costs; gas and electricity

6. water charges; water then sewerage if two debts

7. Council Tax and community charge arrears

8. fines

9. refugee integration loans

10. eligible loans

5. What can be included in the debt

The total debt may include any legal or other costs incurred to recover the arrears.

6. Who can apply

Applications for a deduction for Council Tax arrears may only be made by the billing or levying authority.

7. How local authorities apply:

Online Council Tax deduction requests

You need to apply electronically using a government secure email address. Please email thirdparty.deductions@dwp.gov.uk with the following information on headed paper:

  • the name and address of the authority
  • a direct dial number
  • a named contact
  • a secure email address to exchange information

We will issue you with the Standard Templates and Instructions for completion.

We do not need the claimant’s details at this point. We will tell you when we do.

8. Personal data items

We must be able to identify the claimant from the details on the application for deductions. The application, made when a secure email is established, must include:

  • the name and address of the debtor
  • the name and address of the authority making the application
  • the name and place of the court concerned
  • the date of the order, warrant or decree
  • the amount of the specified arrears
  • the total amount the authority wishes to have deducted, where some of the debt has been paid
  • the National Insurance number and/or the debtor’s date of birth
  • the type of benefit in payment
  • the authority’s unique identifier, the 5 figure AP number

You will receive either confirmation that the deductions have been put in place or rejected by the DWP. The customer will also be sent a notification informing them that deductions will be taken from their benefits.

9. Minimisation, accuracy, retention and reuse of data.

Accuracy statement

To comply with UKGDPR, you must ensure that data provided to DWP is accurate and up to date. Should you require to update any of the above information then contact DWP 0800 169 0310

Data retention

DWP will retain records of any applications for deductions for three years from start date. This is to keep a record of evidence to support the deduction from benefit.

DWP Third Party Deductions Scheme does not reuse the data supplied for any other purposes.

Purpose limitation

The data shared is related to the processing of Third Party Deductions only. DWP will use this data to help customers clear debts accumulated for previous and/or ongoing council tax usage.

Data minimisation

DWP does not require any further information than that listed in section 8 and no other detail should be presented. This is the minimum amount of personal data to achieve purposes for which it is being shared.

Integrity and Confidentiality of Information

DWP manages its information in line with the framework set out by the Personal Information Charter. In accordance to agreed governance both parties will ensure all data is being shared in the most secure ways ensuring all security standards/measures are adhered to.

Further information around how DWP handles personal data can be found in the Personal Information Charter.

Accountability and governance statement

DWP confirm that they can demonstrate compliance with UKGDPR data protection principles this same legislation applies to all Local Authorities and they should be able to demonstrate compliance with this law.

The processing covered in this document is already mentioned in the organisations existing central record of processing activities

10.How we decide if a third party deduction is appropriate

We will consider:

  • if the claimant is getting one of the specified benefits in section 2
  • if there is a liability order, summary warrant or a decree
  • if the claimant is liable for the debt - a deduction cannot be taken for a partner’s Council Tax debt
  • if the individual will be left with a sufficient amount of benefit (10p benefit) to qualify for other linked benefits such as prescriptions, Housing Benefit and local Council Tax Reduction
  • if the debt takes priority over other debts - if there are already 3 other deductions for arrears in place, we will check the priority list in section 4; if the new request is for a higher priority debt, the lowest priority deduction will be stopped, DWP will apply the priority order when more than 3 applications are made

11. Payments

Payment is made into a nominated bank account every 4 weeks in arrears. It may take up to 6 weeks before the first payment is received. We can take a maximum of 3 deductions at any one time.

Local Authorities are to advise their customers that it can take up to 6 weeks before the first payment is received from DWP and will show on their Local Authority account.

Information on payment queries

Third Party deductions is legislated for in Schedule 9 of the Social Security (Claims and Payment) Regulations 1987 and the Social Security (Council Tax) Deductions from Income Support 1993.

Under UK GDPR the lawful basis for this processing activity is Article 6(1) (e) - Public Task. It is not expected that special categories of personal data would be shared by the Local Authority, but if such data is processed by the DWP when making a decision on the Local Authorities request, DWP would rely on Art 9(2) (b) - processing is necessary for exercising specific rights of the controller in the field of social security

Local Authorities must keep records of their own processing activities making note of the legal gateway and lawful basis used, as determined by them.

The following chart summarises the rights of data subjects under the UKGDPR when public task is used as a legal basis:

Right to: Applies? Do the Personal Information Charters/Privacy Notices apply?
Right to be informed. Yes Yes
Right of access. Yes Yes
Right to rectification. Yes Yes
Right to erasure. No Yes
Right to restrict processing. Yes Yes
Right to data portability. No Yes
Right to object. Yes Yes
Rights related to automated decision making including profiling. Yes Yes

13. Data controller relationship

The Data Controller Relationship for this initiative has been determined to be ‘Controller to Controller’:

This has been applied as the Local Authority and the DWP have different purposes to process customer data and make decisions independent of one another. The Local Authority will be the Data Controller and be responsible for obligations under the data protection legislation until the customer’s data is received by DWP, at this point DWP will become the Data Controller of that personal information.

14. Data protection notice

The Department for Work and Pensions (DWP) information management policy is designed to ensure that DWP retains only those documents and data which support business objectives; saves money by reducing information storage costs; protects against allegations of selective document destruction and manages our information risks. DWP information management policy

15. Further information

Customers can request access to the personal information we hold about them through contacting the DWP directly. This is called the ‘Right of Access’. DWP will respond to freedom of information request obligations.

Freedom of Information Requests can be made in writing or by email.

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