Benefits and the Social Security Administration Act

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Revision as of 14:52, 18 September 2008 by Mbrowne (talk | contribs) (Social Security Administration Act and Tax Credits Act)

Social Security Administration Act and Tax Credits Act

The two Acts of Parliament that govern how benefits are paid are the Social Security Administration Act 1992 and the Tax Credit's Act 2002. Both of these have clauses which apparently make it unlawful for banks to impose bank charges on benefits:


Social Security Administration Act 1992 Section 187:

187.—(1) Subject to the provision of this Act, every assignment of or charge on–

(a) benefit as defined in section 122 of the Contributions and Benefits Act; [3(aa) a jobseeker’s allowance;]

(b) any income-related benefit; or

(c) child benefit,

and every agreement to assign or charge such benefit shall be void;


Tax Credits Act 2002 Section 45:

45. Inalienability

(1) Every assignment of or charge on a tax credit, and every agreement to assign or charge a tax credit, is void;



HOWEVER by 'charges' they DO NOT MEAN BANK CHARGES. What is meant is things like attachment of earnings and charging orders.


Although there is some ambiguity, if you took a case to reclaim bank charges to court based on s187 of the Social Security Administration Act 1992 or s45 of the Tax Credits Act 2002 the court would almost certainly find against you.


No one is saying that the banks have the right to take money from benefits, only that you can't use the Social Security Administration Act 1992 or the Tax Credits Act 2002 to stop them. Money taken from benefits is unlawful - but unlawful by virtue of the Unfair Terms in Consumer Contract Regulations 1999 and the common law on penalties in contracts , not under the Social Security Administration Act 1992 or Tax Credits Act 2002 (unfortunately).

Government Response to Petition

“We the undersigned petition the Prime Minister to compel the High Street banks to obey the law on state benefits.”

Details of Petition:

“It is government policy that people on state benefits (income support, tax credits, etc) have their benefit paid into a bank account. All High Street banks impose charges on banking accounts for going overdrawn, not having funds to cover a direct debit,etc. In the case of accounts which have money from state benefits payed into them , such charges are contrary to section 187 of the Social Security Administration Act 1992 or section 45 of the Tax Credits Act 2002. However, the High Street banks continue to ignore this legislation. This petition is to request the Prime Minister to compel the High Street banks to obey the law.”


The Government’s response

The purpose of the Social Security Administration Act 1992 Section 187 and section 45 of the Tax Credits Act 2002 is to prevent people’s benefit money being at risk by it being assigned over to a third party in settlement of a debt. It is not intended to prohibit the application of bank charges. Bank charges are in the nature of an expense, and are incurred by the holder of the account; tax credits and benefits are payable in order to help customers meet their expenses, and as such it is legitimate for banks to deduct charges from the balance of an account held in that bank, whether the money paid into the account comes from tax credits, benefits or other sources, such as earnings.

Full response here:

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