Guidance

A guide for local authorities – arrears of Council Tax

Updated 12 September 2024

1. What is a Third Party Deduction (Purpose)

The Department for Work and Pensions’ Third Party Deduction scheme is primarily designed to protect individuals and their families in receipt of income-related benefits. It is used when there has been a failure to budget for essential household outgoings and other methods to recover the debt have been attempted and failed.

A secondary function of the scheme is to ensure compliance with a social and financial obligation, such as Court fines or Council tax bills.

2. Who can apply (Process)

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

3. 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:

• Income Support
• Both income-based and contributory Jobseeker’s Allowance
• Pension Credit
• Both income-related and contributory Employment and Support Allowance
• Universal Credit – information on applying for deductions from Universal Credit

4. How the scheme works

A fixed amount is deducted to clear any 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.

There can only be one deduction at a time to recover arrears of Council Tax, and a maximum of three arrears deductions in total.

5. 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 or Community Charge arrears

8. fines

9. refugee integration loans

10. eligible loans

6.  What can be included in the debt

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

7. Who can apply

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

8. How local authorities apply

Online Council Tax deduction requests, using a DWP automation.

You need to apply electronically using a government secure email address. Please email: [email protected] with the following information:

• 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 for the applications and Instructions for completion.

9. 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

Following the applications 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.

10. Minimisation, accuracy, retention and reuse of data

Accuracy statement

To comply with UK GDPR, 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 UK GDPR 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.

11. How we decide if a Third Party Deduction is appropriate

We will consider:

• if the customer 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 sufficient benefit (10p benefit) to qualify for other linked benefits such as free 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

12. 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.

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.

13. Information on payment queries

Where a deduction needs to be stopped, the outstanding debt amount adjusting or there has been an overdeduction please send the details to:

[email protected] or [email protected]

14. Legal basis

Legal Power/Gateway

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 UK GDPR 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

15. 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.

16. 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

17. 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.