Guidance

Employment and Support Allowance, Jobseeker’s Allowance, Income Support and Pension Credit: Third party payments creditor and supplier handbook

Updated 24 July 2024

The aim of this handbook

The aim of this handbook is to provide an overview of how the Third Party Deductions Scheme works for organisations and individuals (referred to as creditors or suppliers) who receive third party payments.

Please circulate to all relevant parties within your organisation.

The payment procedures are complex because of the requirement to manage millions of different transactions each year. The following information aims to improve understanding of the procedures and help ensure that payments are made on time and are for the correct amount in all cases.

We are always happy to receive any suggestions or comments that will help us to improve the service we provide.

Introduction

DWP customers in receipt of certain benefits or credits may have deductions taken from their benefit and paid direct to a creditor/supplier under the Third Party Deduction Scheme. Third party deductions will only be made when it is considered to be in the interest of the customer or the customer’s family. The actual payment of monies owed to you, the creditor/supplier, and paid on behalf of the DWP customer is known as a Third Party Payment.

The Third Party Deductions Scheme is operated in accordance with the Social Security (Claims & Payment) Regulations 1987, Regulation 35(1) and Schedule 9 and the Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013, Regulation 60 and Schedule 6.

The Third Party Deduction Scheme should only be used when all other avenues of recovery have been exhausted.

Deductible benefits are:

• Income Support
• Pension Credit
• Jobseeker’s Allowance
• Employment Support Allowance

Types of arrears recovered from benefit

Arrears that can be recovered under the scheme include:

• housing costs (for customer’s current address)
• fuel costs (for customer’s current provider)
• Council Tax or Community Charges
• unpaid fines or compensation orders
• water and sewerage charges (for customer’s current provider)
• child maintenance

Third party deductions are made according to a priority order. The amount you receive will depend on whether other deductions we take have a higher priority. A maximum of 3 third party deductions are taken from each payment of benefit.

Please note the priority order differs between different benefits. If you require more specific information, please contact your customer’s benefit office.

How the scheme operates

Payments

Once payments are set up on the third party payments system, you, the creditor/supplier, will normally receive payment every 28 days and will be 28 days in arrears. Creditors will usually expect to receive the first payment for a customer on your next payment schedule within 6 weeks from the date deductions have commenced.

A BACS (Bank Automated Clearing System) payment will be made into the bank account nominated by you, the creditor/supplier.

A small number of customers are paid their benefit quarterly (13 weekly); this will affect the third party payment as this will also be paid quarterly. If this is inconvenient, please discuss this with us when requesting deductions to be set up.

Once deductions have been set up, you will be sent a notification. Please check the details contained in the notification to ensure they are correct and notify us of any discrepancies or amendments required at the earliest opportunity. The contact details can be found on the top right hand corner of the notification.

Responsibilities

As a creditor/supplier, you are responsible for:

• contacting us to apply to set up deductions from the customer’s benefit – please ensure if you already have an account with us that you quote your supplier/creditor reference number on all applications
• for Income Support and Jobseeker’s Allowance you should contact the Third Party Deduction team at the relevant DWP Benefit Delivery Centre or Pension Centre – correct contact details can be obtained by ringing the TPP Helpline with your customer’s postcode to hand
• checking the details contained in the notification are all correct – please notify us of any discrepancies or amendments required, contact details will be on the top right hand corner of the notification
• informing us of any changes and requesting any amendments to deductions from benefit, for example to end or change deduction amount required, contact details will be on the top right hand corner of the notification – failure to do so could result in unnecessary over deductions from the customer’s benefit
• informing the DWP Third Party Payments team in Blackpool of any amendments required to a customer reference number, on the appropriate form
• allocating all payments to the correct customer account(s) promptly on receipt of your payment schedule and ensuring that any unidentified payments are dealt with as soon as possible – it is important to note that we are unable to deal with queries relating to anything more than 12 months old
• notifying the DWP Benefit Delivery/Pension Centre of any overpayment of deductions from benefit
• informing DWP Third Party Payments team in Blackpool promptly of any changes to your name, address (even if receiving electronic schedules) or bank account details – failure to do this may result in payments being made into an invalid/closed account

The Third Party Deduction team in DWP will:

• agree to third party deductions with the creditor and customer and obtain relevant details to set up new creditors/suppliers on the third party payments scheme if not already set up
• set up, amend, and terminate deductions from benefit on behalf of customers and creditors/suppliers
• calculate and pay any underpayment/missing payments of deductions from benefit to the creditor/supplier
• calculate and recover any overpayment of deductions from benefit made to the creditor/supplier
• deal with any queries from benefit customers relating to third party deductions

The DWP Third Party Payments team in Blackpool will:

• allocate a creditor/supplier number to all new creditors/suppliers set up by the Third Party Deduction Team within the Benefit Delivery/Pension Centre
• maintain the creditor/supplier records with name, address, contact and bank account details when notified
• pay deductions from customer’s benefit to the creditor/supplier, on behalf of the Third Party Deduction team
• deal with queries from creditors/suppliers relating to payment schedules
• refer creditor/suppliers to the relevant Third Party Deduction team to resolve queries regarding the setup of deductions
• recover any overpayments of deductions from benefit made to creditor/suppliers on behalf of the Third Party Deduction team

Payment adjustments

An adjustment becomes necessary when we are not notified of a change in deductions until after the relevant payment has been made to you, the creditor/supplier.

Occasionally deductions may change depending on other deductions and their respective priorities.

It is your responsibility to notify the relevant section if:

• a debt has been fully recovered or if there is any change that affects the amount of debt that we were originally asked to recover
• an overpayment is made or monies are paid to you in error, not one of your customers

For Income Support and Jobseeker’s Allowance you should contact the Third Party Deduction team at the relevant DWP Benefit Delivery Centre or Pension Centre. They will then make the necessary adjustment to both the customer’s and your accounts.

Please do not:

• repay this money to us by cheque
• repay this money to us by bank transfer
• repay any money to your customer
• transfer the money to another organisation where you deem the money should have been paid

It is a condition of the scheme that DWP will recover any monies overpaid or paid in error by adjustment on a future schedule. This is to ensure that the customer’s account is credited with any monies deducted in error.

Changing a customer reference number

The payment schedule you receive will show the customer’s reference number. This is the number you have allocated to the customer.

If the customer reference number needs amending, you will need to inform the DWP Third Party Payments team at Blackpool on the customer reference amendment form ePRS03 by emailing it to:
[email protected]

This form should be used for customer reference amendments only and must include the ‘Owning Office Ref’ which can be found on your bulk schedule against each customer.

Changing creditor/supplier details

If you change name or address or bank account you will need to inform the DWP Third Party Payments team in Blackpool on the relevant creditor/supplier changes form and email it to:
[email protected]

If you take over, or merge with, another company and wish your customers to appear on only one schedule, you must take the following action:

• contact the TPD section at the DWP Benefit Delivery Centre/Pension Centre or contact Universal Credit
• ask them to end deductions under the old creditor/supplier number
• ask them to set up the deductions under the chosen creditor/supplier’s details for each customer affected
• once all your customers have been transferred, you must email the DWP Third Party Payments team at Blackpool and ask them to close the account, email: [email protected]

For customers on Income Support and Jobseeker’s Allowance, you should telephone 0800 169 0310 and for Pension Centre 0800 731 0469, they will then make the necessary adjustment.

Payment schedules

Payment schedules are produced and issued by post or electronically (if set up for electronic schedules). Schedules provide the total direct payment that will be made and contain a full breakdown of each customer’s account due for payment. If you currently receive your monthly schedule by post, you should allow 5 working days from receipt of payment into your bank account for your schedule to arrive.

After that period, if the schedule has still not arrived, you should immediately contact the Third Party Payments team to report non-receipt of the schedule. We will then arrange for a duplicate schedule to be posted to you.

In line with DWP security procedures, we are not able to fax or email duplicate payment schedules and can only post them out to the address details currently held on our system.

Electronic payment schedules

The facility to send payment schedules securely electronically is available. This service is generally for creditors who have multiple customers, but any creditor or supplier may apply to be considered.

For an information pack, please email:
[email protected]

Once you have read and chosen to change your delivery method then complete the form within the pack and send it to:
[email protected]

If you already receive your monthly schedule electronically, you should allow 24 hours from receipt of payment into your bank account for your schedule to arrive.

After that period, if the schedule has still not arrived, you should email:
[email protected]

Local authorities receiving electronic schedules through Transfer Your File should email:
[email protected]

When requesting a duplicate schedule, please include:

• your relevant creditor or supplier number
• your BACS reference number
• the amount and date of the missing schedule

Information found on the payment schedule

Information found on the payment schedule includes:

• owning office ref – customer’s benefit office
• our ref – National Insurance number of customer
• customer ref – this is the number allocated by you, the creditor/supplier, and can be a maximum of 18 alphanumeric characters
• period – the dates the deduction relates to
• amount (£): For IS/JSA – the total payment due, that is the number of weeks x the weekly payment (£)

At the end of the schedule the following paragraph may appear if any recoveries have been made:

The following amounts have been incorrectly credited to your organisation. As a result, they are being deducted from our latest payment to you.

Specific details, similar to those provided for the original payment, are given for each transaction being recovered. Therefore, the amount of the payment due, less any recovery being made, will equate to the payment credited to your bank account.

Your creditor/supplier number will be quoted on the first page of your schedule.

Data protection (GDPR)

The General Data Protection Regulations prevent us from providing you with certain customer information.

We are able to confirm but not provide customer address details, National Insurance numbers and dates of birth. We are unable to provide or confirm if the customer is in receipt of benefit.

We are able to provide you with a customer’s full name and contact telephone numbers for their DWP Benefit Delivery Centre or Pension Centre.

Also please be aware that data protection restrictions and DWP security procedures prevent us from providing you with the bank account details or address we currently hold for your organisation. It is your responsibility to ensure that you hold a full record of all the bank account details that you have provided us with. This procedure is to protect and safeguard against any bank account details being given out to an inappropriate person or organisation.

The payment schedule that we issue is for your company’s use only and due to the customer information it contains, it should not be shared with the benefit recipient or any other outside party.

Useful contacts

Before contacting Third Party Payments, please check:

• if your query is answered in this guidance
• any payment queries with your own finance teams

Third Party Payments (TPP)

Please email Third Party Payments using the Third Party Payments enquiry form. The email address is in the form.

Fill in the:

• Third Party Payments enquiry form (Word file)
• Third Party Payments enquiry form (open document text file)

Please do not give the Third Party Payments email address to benefit claimants.

To comply with data protection regulations, only provide the minimum of customer information required in the form.

The Third Party Payments team can only receive enquiries using this form.

Third Party Payments cannot deal with enquiries from:

• claimants
• creditors who do not yet have a Third Party Payment creditor reference number
• private landlords querying a direct rent payment

Change of address forms

Fill in the:

• form to change the name or address of a creditor or supplier (Excel)
• form to change the name or address of a creditor or supplier (open document spreadsheet)

Email the form to: [email protected]

Change of bank forms

Fill in the:

• form to change the bank details of a creditor or supplier (Excel)
• form to change the bank details of a creditor or supplier (open document spreadsheet)

Email the form to: [email protected]

Customer reference forms

Fill in the:

• form to change customer reference numbers (Excel)
• form to change customer reference numbers (open document spreadsheet)

Email the form to: [email protected]

Income Support, JSA and ESA

Phone: 0800 169 0310
Monday to Friday, 8am to 6pm

Pensions Service

Phone: 0800 731 0469
Monday to Friday, 8am to 6pm