Ask CPAG Online - When can you get a UC Alternative Payment Arrangement?

This section covers when you can get an alternative payment arrangement (APA).

See also, How should you apply for an Alternative Payment Arrangement? and What problems can arise with Alternative Payment Arrangements?

What does the law say?

The Universal Credit etc (Claims and Payments) Regulations 2013 allows the DWP to pay universal credit (UC):

  • other than monthly in arrears (regulation 47(1));

  • partly or wholly to a third party (e.g. a landlord) if this is necessary to protect the interests of a claimant, a child for whom a claimant is responsible, or a severely disabled person for whom a claimant is getting a carer's element (regulation 58);

  • to one partner in a couple, or in 'split payments' to both partners if it is in the interests of any of the above people (regulation 47(6)).

These are discretionary powers, which means there is no legal right to an APA within the regulations and no right of appeal against a refusal of an APA. Common law principles, however, require the DWP to exercise discretion reasonably and rationally, taking into account all the relevant circumstances of each individual case. Decision making must also comply with human rights and equality legislation.

How does the DWP make decisions?

The DWP has developed guidance on how to exercise its discretion to make APAs.

The guidance sets out some general principles and criteria for decision making as well as specific information relating to each type of APA.

The guidance is not law, but if it supports your case for an APA you should point this out when applying for an APA or challenging a refusal, by referring to or quoting from the relevant sections of the guidance. A failure by the DWP to follow their own guidance could potentially render a decision unlawful. The fact that your circumstances are not covered by the guidance, however, does not necessarily mean that you should not get an APA, where, for example, there are grounds which show that an APA is necessary to protect your interests. If this is the case, you could quote the law (see above) and explain why an APA is needed. A refusal to consider your case solely because your circumstances are not covered by the guidance would be an unlawful fettering of the DWP's discretion to make an APA.

The guidance sets out the following general principles and criteria:

When can an APA be considered?

APAs can be considered at any point of a UC claim, including during your initial interview with a DWP work coach, or subseqently based on information from you, your representative or adviser, or your landlord's notification of rent arrears.

What are the key factors?

APAs should only be considered where you are unable to manage single monthly payments, resulting in a risk of financial harm to you and / or your family. APAs should be 'claimant centric' i.e. discussed and considered with you, taking into account your individual circumstances.

Relevant factors include whether you:

  • are managing to pay your bills and your rent on time and have or have had arrears;
  • can budget on a monthly basis;
  • can manage a household budget with your partner.

The guidance also lists a number of 'Tier One' and 'Tier Two' factors in Annexe A with explanatory bullet points. Tier One factors are described as 'highly likely / probable need for APAs; Tier Two factors as 'Less likely / possible need for APAs'. The Tier One factors are:

  • Drug / alcohol and / or other addiction problems eg gambling
  • Learning difficulties including problems with literacy and / or numeracy
  • Severe / multiple debt problems
  • In temporary and / or supported accommodation
  • Homeless
  • Domestic violence / abuse
  • Mental health condition
  • Currently in rent arrears / threat of eviction / repossession
  • Claimant is young: a 16/16 year old and / or care leaver
  • Families with multiple and complex needs

There is further guidance under each head which further defines and restricts who it applies to.

What is the priority order of APAs?

Direct ('managed') payments of the UC housing costs element to the landlord are the top priority APA which should always be deducted and paid first, followed by more frequent than monthly payments, and then split payments to couples.Combinations of different types of APAs can be considered where appropriate. If you meet the criteria for more frequent or split payments, direct payments to your landlord should also automatically be paid.

When are APAs reviewed?

The thrust of the guidance is that APAs are temporary until you are capable of managing a single monthy payment of UC, including the housing costs element. The review period depends on your circumstances, but periods of 3, 6, 9, 12, 15, 18, and 24 months are cited. Particularly vulnerable claimants (e.g. with a long term mental health condition) may need longer review periods. On review, the DWP should decide whether you are, and feel that you are, financially capable of managing without an APA, taking into account any money advice you have had. If you have more than one APA, a phased withdrawal may be appropriate.

When can you get direct payments to your landlord?

The guidance says direct ('managed') payments to your landlord can be made if:

  • you have at least two month's rent arrears; or

  • you have continually underpaid your rent over a period of time and have accrued at least one month's rent arrears.

it appears the DWP currently have a policy of automatically instituting direct payments on request when they have evidence of at least two month's rent arrears. At this point, they can also make an additional direct payment of between 10% and 20% of your standard allowance to clear your rent arrears (the amount will depend on whether you have any other third party deductions from your UC - see What problems can arise with Alternative Payment Arrangements? if you want to dispute the amount).

Annexe A of the guidance also lists other 'Tier One Factors' which make the need for an APA (including direct payments to the landlord) 'highly likely' or 'probable'. They include where:

  • you have been evicted for rent arrears within the last 12 months or are currently threatened with eviction;

  • you have severe debt problems;

  • you have a disability, mental health condition, learning difficulties or addiction problems which impairs your ability to manage your finances.

Any of the other Tier One or Tier Two Factors may also indicate a need for an APA in the form of direct payments to your landlord.

The DWP has also produced a Guide to UC and rented housing for landlords. Paragraph 8.2 confirms that direct payments can be considered when you have one or two month's rent arrears. Paragraphs 8.3 to 8.5 state that direct payments can also be considered:

  • from the start of your UC claim where you have signficant support needs;

  • where you are already in arrears when you claim UC;

  • where you were previously getting housing benefit in the form of a local housing allowance, which was being paid directly to your landlord.

How much can be paid to your landlord?

The law gives the DWP discretion to decide how much to pay, depending on what is necessary to protect your interests. The guidance refers to payment of the UC housing costs element to the landlord. This may be less than your actual rent because of the application of local housing allowance caps (if you are a private tenant), the 'bedroom tax' (if you are a social tenant), ineligible service charges, and deductions for non-dependants ('housing costs contributions'). There is discretion, however, for the DWP to pay more than the housing costs element, up to the level of your actual rent payments.

Where the amount of your UC is less than your housing costs element (e.g. because you have earnings or other income, or your UC has been reduced because of a sanction or the 'benefit cap'), the DWP can decide how much (if any) to pay to your landlord.

If you are getting discretionary housing payments (DHPs) from your local authority (LA) to make up some or all of the shortfall between your UC housing costs element and your rent, the LA has discretion to pay them to you or directly to your landlord. Where your UC housing costs element is being paid to your landlord, it may be easier if your DHPs are also paid in this way. Note that receipt of DHPs should not make you ineligible for an APA for 'managed payments', if they are in your interests.

If you are unhappy about the amount being paid to your landlord to cover your rent and rent arrears, see What problems can arise with Alternative Payment Arrangements?  

When can you get paid more frequently?

If you have difficulty budgeting on a monthly basis, the DWP can pay you more frequently - normally twice monthly, or exceptionally four times a month. This type of APA can start after the end of your first assessment period, normally with a payment of half of your monthly award, with the remaining half paid 14 or 15 days later. In exceptional cases, you could be paid a quarter of your monthly award at 7 or 8 day intervals.

Any of the Tier One (or Tier Two) factors listed in Annexe A of the guidance could be relevant to your ability to budget on a monthly basis.

When can you get split payments?

The guidance says that UC payments can be divided between partners in a couple in specific exceptional circumstances, including where there is domestic violence, financial abuse, or where a claimant is mismanaging UC payments and not using them to meet the day to day needs of the family. Although the guidance refers to 'split payments' and states that the larger percentage could be allocated to the person with primary caring responsibilities (i.e. for children), the law specifically allows payment to be made solely to one partner, where this in the interests of the claimants and their family.   

Any of the Tier One (or Tier Two) factors listed in Annexe A of the guidance could be relevent, but the overiding legal test is whether payments to one or both partners are in the best interest of the claimants.