How are benefits and tax credits paid
Benefits from the Department of Work and Pensions are usually paid by direct credit transfer straight into an account. It used to be possible to be paid by cheque or order book but these have been phased out. If you have problems opening an account, or payment by this method will be difficult for you, see under the heading Difficulties opening or managing an account.
Child Tax Credit, Working Tax Credit, Child Benefit and Guardian's Allowance will also be paid into an account.
Council Tax Reduction is usually paid by a reduction in your Council Tax bill. Housing Benefit may be paid by a reduction in your rent if you are a local authority tenant, and it is sometimes paid direct to your landlord in other circumstances. Otherwise Housing Benefit will be paid to you by cheque or into an account. If you have problems opening an account, or payment by this method will be difficult for you, see under the heading Difficulties opening or managing an account.
When you claim benefit, the office which decides your claim will also decide how you should be paid. You cannot appeal about the way your benefit is paid, but if it causes you problems, you should complain.
For more information about complaining, see Problems with benefits and tax credits.
Payment into an account
The main method of paying benefits and tax credit is into an account by direct credit transfer (called ‘direct payment’). This means the money goes straight into an account in your name. If you make a claim, you will be asked for details of the account you want to use for your benefit or tax credit. If you have problems opening an account, or payment by this method will be difficult for you, see under the heading Difficulties opening or managing an account.
If you need information about direct payments of benefit or state pension, you should contact the office that deals with your benefit claim or pension. If you have had a letter from the Department for Work and Pensions asking for details of your account, the letter will give you a number you can ring for more information.
If you are claiming tax credits, you can call the Tax Credits Helpline on 0345 300 3900.
Types of account
You can have benefit or tax credit paid into a standard bank or building society account (for example, a current account), a basic bank account (also called an introductory account) or a Post Office card account. Basic bank accounts are easier to open but do not allow you an overdraft. Some standard bank accounts and basic bank accounts will allow you access to money at a post office, but you should check with your bank or building society.
A Post Office card account can only be used for payments of benefit (but not Housing Benefit), state pension and tax credits. You cannot pay any other income into a card account. You can withdraw money from the account at any post office using a card and PIN number, but you cannot get access to the money anywhere else. If you want to open a card account you must first contact the Department for Work and Pensions (if you get a benefit or state pension) or HM Revenue and Customs (if you get a tax credit).
When you open an account, whatever type it is, you will be asked for proof of who you are and where you are living. If this causes problems, you may have difficulty opening an account.
Using an existing account or opening a new account
If you already have a bank or building society account, you should check whether this is suitable for the payment of your benefit or tax credit. If it is a savings account or a mortgage account it may not be suitable. If it is a joint account, or an account which is often overdrawn, you may want to use another account instead.
Difficulties opening or managing an account
From July 2013, cheque payments are no longer available for benefits administered by the Department for Work and Pensions (DWP) or by the Social Security Agency in Northern Ireland If you are unwilling or unable to open an account for payment of your benefit, the DWP will pay you using the Simple Payment service. You will be able to collect your benefit from a PayPoint outlet displaying the Simple Payment sign. You can search for your nearest store on the Paypoint website at www.paypoint.co.uk.
You will be issued with a card that doesn't need a PIN. You will need your card, a memorable date and proof of ID in order to collect your cash. The DWP does not need your agreement in order to pay you in this way, so if you cannot or do not wish to be paid into an account, Simple Payments will be the only other option. More information about Simple Payment is on the GOVUK website at www.gov.uk.
It may still be possible to have your tax credits paid by cheque in exceptional circumstances. You should get in touch with HM Revenue and Customs about this.
If you have difficulty opening an account you can also consult an experienced adviser, for example, a Citizens’ Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
If you lose your entitlement to tax credits because you do not have an account, or if you have any difficulty getting paid other benefits because you do not have an account, you should contact an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
Problems with direct payment
If you are being paid by direct payment and there is a mistake or delay because the bank, building society or post office have made an error or been inefficient, you should ask them to put it right. If the problem is still not resolved you should make a complaint. If the error or poor service is because of a problem at the Department for Work and Pensions, the local authority or HM Revenue and Customs (HMRC), complain to the office responsible for making the payment. If the error or inefficiency means you suffer financial loss, you may be able to get compensation.
For more information about complaining to the Department of Work and Pensions, the local authority or HMRC, see Problems with benefits and tax credits.
For more information about organisations which help with complaints about banks and building societies, see Buying services – your rights.
Problems with cheque payments
If you are being paid by cheque, and you do not receive it, or it is lost, stolen, or destroyed, you should get in touch with the office which paid it as soon as possible. You should also get in touch with the police to report the loss or theft.
If you have problems with your cheque, you can also consult an experienced adviser, for example, at Citizens Advice Bureau. contact an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
It's against the law for you to be treated unfairly because of age, disability, gender reassignment, pregnancy or childbirth, race, religion, sex or sexual orientation when benefits or tax credits are paid to you. Also, the Department for Work and Pensions, HM Revenue and Customs and most local authorities have policies which say they will not discriminate against you because of other things, for example, if you have caring responsibilities. If you feel that you've been discriminated against when you are paid benefits or tax credits, you can make a complaint about this.
For more about discrimination, see our Discrimination pages