Guidance

Alternative Payment Arrangements (APAs)

Updated 17 January 2024

Universal Credit prepares claimants for the world of work in which 75% of employees are paid monthly. It also encourages claimants to take responsibility for their own financial affairs. To that end, Universal Credit is paid in a single monthly sum to households who are expected to manage their own budgets.

It is important that claimants are able to make the same sorts of decisions as those in work and develop the financial capability to do so. This guidance sets out the department’s approach to provide Alternative Payment Arrangements (APA) where appropriate for Universal Credit claimants who cannot manage their single monthly payment.

1. Types of Alternative Payment Arrangements (APAs)

APAs are for claimants who cannot manage their single monthly payment and there is a risk of financial harm to the claimant or their family.

The move to a single monthly household payment is a significant change to the way most benefits are currently paid.

The following APAs are available to help claimants who need additional support:

• paying rent directly to their landlord, known as a ‘managed payment’
• more frequent payments: twice a month – or in exceptional circumstances 4 times a month – instead of once a month
• split payment of an award between partners in a couple

When an APA can be considered

APAs may be considered at any point during the Universal Credit claim. They may be identified at the outset by a work coach, or case manager, or at any time during the claim, such as if the claimant is struggling with the single monthly payment.

They can also be triggered by information received from the claimant, their representative or their landlord.

APAs will be considered on a case-by-case basis. A claimant can have one or more APAs based on their individual circumstances.

Universal Credit staff decide whether to award an APA taking account of many factors and using the tier 1 and tier 2 guidance as set out in Annex A. These are used as an indicator to decide if these arrangements are appropriate to an individual.

For example:

• is the claimant managing to pay their bills on time, particularly their rent, and have they fallen into arrears in the past, or are they currently in arrears?
• do they think they will be able to manage a monthly budget, taking account of their income and outgoings over a calendar month?
• if the claimant is part of a couple, are they used to managing their money together and do they think they will be able to manage the single Universal Credit payment to the household?
• is the claimant vulnerable (maybe they have addiction problems or have been homeless before)?

The APA factors include the following:

• addiction problems
• rent arrears
• mental health issues
• learning difficulties
• previously homeless

More detailed information about the tier factors - annex A.

A claimant does not need to be in rent arrears to be considered for an APA.

Case study examples - annex B

Priority order

APAs will be considered in the following order of priority:

1. Paying the Universal Credit housing costs to the landlord will be the first priority where it is part of the Universal Credit award, to safeguard the claimant’s home.

The managed payment of housing costs to the landlord would always be deducted and paid first as the priority APA.

1. Secondly, and where appropriate, UC staff consider if a more frequent payment is needed.

2. Thirdly, the split payment of an award between partners is only considered in certain circumstances, for example:

• financial abuse where one partner mismanages the Universal Credit payment
• where domestic violence is an issue and the couple remain together in the same household, but only one claim to Universal Credit is made

More information about split payments.

If the claimant meets the criteria for either (2) or (3) above, if they have rental liability, a managed payment to their landlord is considered. The remaining Universal Credit will be paid as appropriate.

In summary, a claimant could therefore have any of the following combinations:

• managed payment only
• more frequent payments only (for non-householders)
• split payment only
• managed payment and more frequent payments
• managed payment and split payments
• more frequent payments and split payments (for non–householder couples where appropriate)
• managed payment, more frequent payments and split payments

The above aims to support those claimants over time in developing their budgeting capability and at the same time safeguarding their home.

2. Managed payment to landlord

We expect most Universal Credit claimants will receive the single monthly payment and take responsibility for paying their own household bills on time, including their rent.

But we recognise that some claimants will need extra support in managing this payment. Therefore, in some cases a managed payment might be appropriate.

When a managed payment can be requested

A managed payment can be made when:

• a claimant is in arrears with their rent for an amount equal to, or more than, 2 months of their rent
• a claimant has continually underpaid their rent over more than 2 months, and they have accrued arrears of an amount equal to or more than one month’s rent
• any of the other Tier 1 and Tier 2 APA factors apply
• a claimant received Housing Benefit before and it was paid to their landlord, a managed payment can be considered providing the claimant continues to meet the Tier 1 or Tier 2 APA factors

This is part of the conversation Universal Credit staff will have with the claimant at the start of the claim.

Social landlords who are appointed under the Trusted Partner scheme, will also have conversations with their tenants at the start of their Universal Credit claim.

Arrears of rent and service charges for the property the tenant is currently living in are included in the list of deductions that can be made from a Universal Credit payment.

If a tenant has accrued rent arrears to the value of 2 months’ rent or more, their current landlord can request a rent arrears deduction.

Who can request a managed payment to landlord

Either the claimant, or their landlord can make this request.

If the claimant is making the request, this can be by:

• using their online Universal Credit account
• talking to their work coach or case manager
• phoning Universal Credit on 0800 328 5644

Find out about call charges

If the landlord is making the request, this can be done by using the Apply for a Direct Rent Payment service which is an online service for landlords to request direct payments of rent or rent arrears.

What happens next

Following a request for a managed payment a decision will be made whether or not a managed payment is appropriate and both the landlord and claimant will be informed of the decision.

Where the managed payment is refused, the notification issued to the landlord will not advise if their tenant is currently getting Universal Credit, nor will it tell them the reason why the request has been refused.

This is due to data sharing regulations and claimant confidentiality.

More information about the Managed Payment To Landlords.

3. More frequent payments

Universal Credit is paid monthly. But in instances where it is identified that a claimant is finding it difficult to budget monthly, they can have their Universal Credit divided over the month to be paid more frequently - twice a month or, exceptionally, 4 times a month.

These can only start from the end of their first assessment period and would, in most circumstances, be half their Universal Credit award, with the remaining half paid 14 to 15 days later.

In exceptional cases they could be paid 4 times a month, for example a quarter of their Universal Credit payment after the end of the first assessment period and the rest paid at 7 to 8 day intervals.

In cases where their Universal Credit includes housing costs, this should be accompanied by a managed payment to safeguard their home.

Who can request a more frequent payment

If the claimant is making the request, this can be by:

• using their online Universal Credit account
• talking to their work coach or case manager
• phoning Universal Credit on 0800 328 5644

Find out about call charges

4. Split payments

In very exceptional circumstances payment of Universal Credit can be divided between 2 members of the household.

This is known as a split payment. Split payments are to prevent hardship to the claimant and their family. These should only be considered in certain situations, such as domestic violence or where financial abuse occurs and one partner mismanages the Universal Credit payment.

A split payment is when the household Universal Credit award (which would normally be paid into a nominated account) is divided between 2 claimants in the household.

With a split payment claimants keep responsibility for their claim and any related activity (such as work programme activity).

A split payment can be paid to 2 separate members of the household, with the larger percentage allocated to the person with primary caring responsibilities, in other words, the one with child care.

This is to ensure the health and well-being of most of the household.

If a split payment is to be made, the decision maker must also consider a managed payment when there is a rental liability.

When split payments are considered

Split payments are normally considered to prevent hardship to the claimant and their family, for example if the Universal Credit claimant is not managing their financial affairs and not meeting their family’s day-to-day needs.

Split payments should be considered when:

• either member of the household notifies DWP of financial mismanagement or financial abuse
• either member of the household notifies DWP that there are domestic violence issues
• either member of the household cannot or will not budget for their own or their family’s basic day-to-day needs

Who can request a split payment

Either member of the household can request a split payment.

This can be by:

• using their online Universal Credit account
• talking to their work coach or case manager
• phoning Universal Credit on 0800 328 5644

Find out about call charges

Claimant appeals against an Alternative Payment Arrangement

The decision to award an APA is discretionary and made by a Universal Credit Agent, a decision maker, work coach, or case manager acting on behalf of the Secretary of State.

There is no right of appeal against the decision, but the decision can be reviewed by the same or another Universal Credit agent if further information is provided.

Alternative Payment Arrangement reviews

APAs will be reviewed to take account of a claimant’s changing circumstances and characteristics.

Universal Credit staff will decide on the review period and each case will vary as claimants who are awarded an APA will have different characteristics, and therefore a one size fits all approach is not considered appropriate.

Discretion is used to decide on the best review period to be set using information provided by the claimant, their representative or landlord, to help inform the APA review period.

As a guide, we expect reviews will be set for 3, 6, 9, 12, 15, 18 and 24 month periods.

If a claimant has more than one APA in place, the review period may be slightly longer than if they only had one.

For some claimants who are particularly vulnerable, such as those who have a long term mental health condition with no one to support them, it may be more appropriate to have a longer review period.

Factors for reviewing Alternative Payment Arrangements

At the review, Universal Credit staff will decide if the claimant is now capable of managing the single monthly payment.

They will consider if the claimant now feels financially capable to manage their Universal Credit without the need for an APA.

If the claimant has 2 or more APAs, it may be appropriate to consider a gradual move to the single monthly payment, for example managing monthly payments first, followed later by paying their rent.

This ‘stepping stone’ approach aims to help make the transition to the single monthly payment easier. The outcome of the review will be recorded in the claimant’s online account if it is decided that the APA should continue, and a new review date set.

Reviewing an managed payment due to a change of circumstances

If the claimant declares a change of circumstances, such as a change of address or change of income, Universal Credit staff will decide if a managed payment should continue.

5. Other support

Help to Claim

For claimants who need help to set up their Universal Credit claim, the Citizens Advice Help to Claim service offers tailored, practical support to help people make a Universal Credit claim and receive their first full payment on time.

Other financial support

When an APA is agreed a claimant may also be asked to take steps to help manage their money, such as getting budgeting or financial advice.

People in financial difficulties, can get help and advice from the government, local councils, and other organisations, such as advicelocal.uk.

Universal Credit claimants may also be able to get other financial support depending on their circumstances.

Annex A - factors to consider for Alternative Payment Arrangements

Tier 1 factors – Highly likely or probable need for Alternative Payment Arrangements

1.1 Drug, alcohol or other addiction problems, such as gambling

• claimant declares, or has declared on a previous claim, a problem with substance abuse
• claimant considers themselves to be addicted or a regular user
• substance misuse includes problems with alcohol, any type of illegal drug or improper use of non–illegal substances like glue
• feedback from third parties about the individual’s addiction should also be taken into account, such as support agency staff

1.2 Learning difficulties including problems with literacy or numeracy

• claimant has difficulty reading, writing or performing simple mathematical tasks
• may be evidenced by low or no educational achievement
• may also be linked to a medical condition or disability (for example autism, Down’s Syndrome)

1.3 Severe or multiple debt problems

• claimants are unable to meet credit commitments from available income, taking account of minimal necessary expenditure.This may include personal loans, mortgage repayments, utility arrears and other debts
• severe debt problems could be evidenced by multiple debts or non-payment of multiple debts over a period of 2 months or more, and possibly heavy use of the new localised welfare help schemes
• the key factor is that the claimant has not made a repayment plan or is not sticking to the terms of a repayment plan, and is a very disorganised and chaotic money manager

1.4 In temporary accommodation

• for residual temporary accommodation cases still paid by Universal Credit because there has been no change in rent liability since 11 April 2018

• consider only if the claimants’ status in this accommodation impedes their ability to manage their financial affairs effectively as some types of accommodation will be short stay, but others will have longer placements of 2 years or more and many claimants will be able to manage the Universal Credit single monthly payment

1.5 Homeless

• as per the Housing (Wales) Act 2014 and Housing (Scotland) Act 1987, a claimant is homeless if they have no accommodation that it is safe or reasonable for them to occupy, or if they are expected to have no access to accommodation within 28 days
• in practice, this includes people who are rough sleeping, people who are sofa surfing with friends or relatives, people in hostels, people who are about to be evicted and people in unsafe and unsuitable accommodation such as squats

1.6 Domestic violence and abuse

• claimants who are currently suffering domestic abuse, or have been victims of domestic abuse
• this includes any incident of threatening behaviour, violence or abuse (psychological, physical, sexual, financial or emotional) between adults who are, or have been, intimate partners or family members, regardless of gender or sexuality. This can also include forced marriage and so–called ‘honour crimes’
• abuse that forms a pattern of coercive and controlling behaviour, such as controlling the other person by using a variety of financial means

1.7 Mental health condition

• claimant has a mental health condition (like a phobia, bi–polar disorder, depression and anxiety) which impairs their ability to manage their own affairs effectively
• feedback from a third party about the symptoms that the individual has should be taken into account, including any evidence from legacy information held

1.8 Currently in rent arrears or threat of eviction or repossession

• claimant is currently in arrears with their rent for an amount equal to or more than 2 months of their rent
• claimant has continually underpaid their rent over a more than 2 months, and they have accrued arrears of an amount equal to or more than one month’s rent
• claimant has been evicted for rent arrears within the last 12 months
• claimant is subject to or threatened with eviction or repossession

1.9 Claimant is a 16 or 17 year old or a care leaver

• 16 or 17 year olds – many will have limited or no financial capability and to claim Universal Credit will have to be in some form of hardship already (such as estranged from parents, have a child, be sick or disabled)
• care leavers – claimants who have recently been in local authority care and includes those over 17. Most claimants leave care at 18, but some leave as early as 16

1.10 Families with multiple and complex needs

• claimant is part of a family that is part of the Troubled Families Programme
• other families with multiple and complex needs could include a combination of persistent offending behaviour, persistent anti–social behaviour, mental health issues, drugs and alcohol issues, domestic violence, safeguarding issues and debt
• feedback from third parties, such as a family intervention case worker, about the complex and overlapping nature of problems in the claimant’s family should be taken into account

Tier 2 factors – Less likely or possible need for Alternative Payment Arrangements

2.1 Third party deductions in place (such as for fines or utility arrears)

• claimant is currently making payments from benefit to repay utility arrears (such as gas, water, electricity)

2.2 Claimant is a refugee or asylum seeker

• this definition applies to those claimants who have been granted refugee status, with indefinite leave to remain and with recourse to public funds within the last 12 months
• claimant is an asylum seeker who is eligible to claim DWP benefits while their application is being processed
• their status impedes their ability to manage their own financial affairs effectively

2.3 History of rent arrears

• claimant is not in arrears but may have been within the last 12 months and was subject to, or threatened with, eviction or repossession
• consider the fact that the claimant may now be financially capable and able to manage their own financial affairs effectively

2.4 Previously homeless or in temporary or supported accommodation

• claimant was homeless (as per definition above) within the last 12 months but is now in suitable accommodation
• claimant has moved from temporary or supported accommodation into independent accommodation within the last 12 months
• consider the fact that the claimant may now be financially capable and able to manage their own financial affairs effectively

2.5 Other disability (such as physical disability or sensory impairment)

• claimant has a disability/impairment not covered by the ‘mental health condition’ section that impairs their ability to manage their own financial affairs effectively

2.6 Claimant has just left prison

• claimant has left prison within 3 months of making their claim to Universal Credit
• consider only if their status impedes their ability to manage their Universal Credit financial affairs effectively – budgeting support may be the answer rather than an APA

2.7 Claimant has just left hospital

• claimant has left hospital within 3 months of making claim to Universal Credit
• consider only if their status impedes their ability to manage their Universal Credit financial affairs effectively – budgeting support may be the answer rather than an APA

2.8 Recently bereaved

• claimant has suffered the loss of a close family member (as described in social fund guidance) within the last 3 months
• consider only if their status impedes their ability to manage their Universal Credit financial affairs effectively – budgeting support may be the answer rather than an APA

2.9 Language skills (such as English not spoken as the first language)

• claimant does not speak or understand English or does not speak or understand English as their first language
• consider only if their status impedes their ability to manage their Universal Credit financial affairs effectively – budgeting support may be the answer rather than APA

2.10 Ex-service personnel

• claimant was a member of HM Forces and was discharged within the last 18 months. This does not include civilian posts with HM Forces or any reserve organisations, such as the Territorial Army
• consider only if their status impedes their ability to manage their Universal Credit financial affairs effectively – budgeting support may be the answer rather than an APA

2.11 A person who is ‘Not in Education, Employment, or Training’ (NEET)

• claimant is aged 18 to 24 and not in education, employment or training
• consider only if their status impedes their ability to manage their Universal Credit financial affairs effectively – budgeting support may be the answer rather than an APA

Annex B - case study examples

The following case study examples are an indication of how several of the above factors can come into play when considering an APA.

Example 1

Lucy is 26 years old and makes a claim to Universal Credit and following a conversation with her work coach, it comes to light that she has a drug addiction problem. She is currently a regular user of cannabis and is not receiving treatment (she says her local support service can only treat class A users’ at present), she wants treatment and says without it she cannot stop ‘using’.

She is therefore considered for an APA as she risks spending a large proportion of her Universal Credit income on drugs. A decision is made to pay her rent direct to her landlord and to pay her more frequently than monthly. She is referred for treatment. Her circumstances will be reviewed in 9 months’ time.

Example 2

Gary is 22 and not in education, employment or training and claims Universal Credit. Following a conversation with his case manager, it comes to light that he has dyslexia and struggles to read: he does not understand basic written documents and finds it difficult to manage his finances.

During the conversation with him we discover that he also has debts. Although he does have some agreements in place to repay his arrears he is not sticking to the terms and therefore risks further action if he continues to fail to pay.

He is also in debt to family members and is paying small amounts in erratic ways and well below what was agreed.

He continues to borrow more money from friends to cover his debt payments. This is causing him a lot of anxiety.

It is agreed to pay his Universal Credit housing costs as a managed payment. His circumstances will be reviewed in 6 months.

Example 3

Naveed claims Universal Credit following his discharge from a long spell in hospital.

Although his health is poor he is now in recovery. During his spell in hospital he accumulated some debt and his English is not very good.

During the interview with Naveed and his health worker it transpires that he considers himself financially capable, he explains that he has an active bank account with direct debit facilities, but would welcome some support to get the debts he has accumulated in order.

APA are therefore not considered appropriate and he receives his Universal Credit via the single monthly payment.

Example 4

Susan claims Universal Credit and during her meeting with her work coach it comes to light she has over 2 months’ rent arrears. The work coach decides that a managed payment is needed from the start of the claim.

This is welcomed by Susan as this will help her manage her outgoings while she looks for another job.

The work coach decides her APA will be reviewed in 12 months.