Benefit claimants who owe money to the Department for Work and Pensions (DWP) could see cash taken directly from their bank accounts under new debt recovery powers, without the need for a court order.
The powers, introduced under the Public Authorities (Fraud, Error and Recovery) Act 2025, allow the DWP to recover certain outstanding debts from bank accounts, including through regular payments or a one-off deduction.
The legislation also gives the department new enforcement powers against people who have stopped claiming benefits and are not in employment where repayments can be taken through Pay As You Earn (PAYE).
The DWP began writing to people with outstanding debts on June 24, warning them that the new powers could be used to recover money owed.
In its letters, the department said the action “can be avoided entirely by getting in touch with DWP within the next four months”.
Four months from June 24 falls on Saturday, October 24, meaning people who received those letters should check the deadline stated in their correspondence and contact the department if they have not already done so.
Who could be affected by the new DWP powers?
The changes are aimed at recovering money owed by people who are no longer receiving benefits and whose debts cannot be recovered through deductions from ongoing benefit payments or PAYE earnings.
Previously, the DWP said it had limited options to recover money from people in these circumstances if they refused to repay voluntarily.
Under the new rules, the department can order a bank to make regular deductions or take a specified lump sum from an eligible account without first obtaining a court order.
However, the powers are not an automatic seizure of money from everyone who has previously claimed benefits. The DWP must follow statutory procedures before making a direct deduction order, including obtaining and considering bank statements.
It must also ensure the proposed deductions would not cause hardship in meeting essential living expenses.
The legislation includes further provisions governing which accounts can be targeted and how deductions are calculated.
DWP debts could date back years, experts warn
Debt advice specialists at Free Grants for Felons warned that some people contacted by the DWP may not realise they owe money from an old benefit claim.
They said: “An overpayment can date back years, to a claim that ended when someone moved, changed jobs or went into hospital, and the letter often goes to an old address. If you have had one, or think you might owe money from an old claim, ring DWP Debt Management now rather than waiting for money to leave your account. A repayment plan you agree yourself is far easier to live with than one that is imposed.”
An overpayment can arise when someone receives more benefit than they were entitled to, although the circumstances and amount owed will vary from case to case.
Anyone who receives a letter should check the details carefully, particularly if they do not recognise the debt or believe the amount is wrong.
DWP minister says department will work with people who owe money
Work and Pensions minister Andrew Western said in June: “To anyone with an outstanding debt - our door is open and DWP will always work with you to find an affordable way to repay.”
The department has said people can contact it to discuss repayment options, including arrangements based on what they can afford.
The new powers also include the ability to seek a court order disqualifying someone from driving in certain circumstances. This is a separate enforcement measure, rather than an automatic consequence of owing benefit debt.
Under the rules described for the driving disqualification power, the debt must be at least £1,000. Essential driving needs, such as driving for courier work or caring for another person, must also be taken into account. Any disqualification can initially be suspended while agreed repayments are maintained.
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What should you do if you receive a DWP debt letter?
If you have received correspondence about an outstanding benefit debt, there are several steps you can take.
- Open the letter: Do not ignore correspondence from DWP Debt Management, even if you believe it is a mistake.
- Check the amount: Ask the DWP to explain how the debt was calculated if you think the figure is wrong.
- Contact the department: If you no longer claim benefits, the letter should explain how to repay the debt or arrange monthly payments.
- Discuss affordability: If you cannot afford to repay the full amount, ask about an affordable repayment arrangement.
- Get free debt advice: MoneyHelper, the government-backed money guidance service, provides free and confidential guidance on dealing with debt.
Anyone who has received a letter should check its specific instructions and deadline rather than assuming the same date applies to every case.
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