DWP can take money from bank accounts under new powers

The authority to do so comes from the Public Authorities (Fraud, Error and Recovery) Act 2025.

Under the legislation, the department can instruct banks to make regular deductions or remove a lump sum from an account belonging to someone who owes money from a previous benefit claim.

Anyone who has received a letter about an unpaid debt is being urged to get in touch with the DWP before the deadline passes and agree a repayment plan they can afford.

The new measures are primarily aimed at former claimants who no longer receive benefits and are not in work where repayments could be deducted through PAYE.

Previously, the DWP said it had few ways to recover debts from people in this situation if they declined to pay voluntarily.

The department started sending letters on June 24, alerting recipients that the new enforcement powers could be used against them.

Those letters stated that action “can be avoided entirely by getting in touch with DWP within the next four months”.

That four-month window closes on Saturday. Anyone who received such correspondence and has not yet responded should check the specific deadline in their letter and contact the department as soon as possible.

The powers do not mean money will be automatically seized from every former claimant. The DWP must follow statutory procedures, including reviewing at least three months of bank statements and carrying out affordability and vulnerability assessments.

Debt advice specialists have cautioned that some people may not even be aware they owe money from an old claim.

Overpayments can stem from circumstances that changed years ago, such as moving house, starting a new job or being admitted to hospital.

Advisers at Free Grants for Felons 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.”

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.”

Anyone who has received a letter from DWP Debt Management should open it promptly, even if they suspect an error. If the amount appears incorrect, they should ask the department to explain how the figure was calculated.

Those who can no longer afford to repay the full sum should request an arrangement based on what they can realistically manage.

MoneyHelper, the government-backed guidance service, offers free and confidential support for anyone struggling with debt.

The legislation also grants the DWP the ability to apply to a court for a driving disqualification in certain cases. This measure applies only where the debt is at least £1,000.

Essential driving needs, such as work as a courier or caring responsibilities, must be considered before any ban is imposed. A disqualification can be suspended provided agreed repayments are maintained.