The Income-related Benefits (Subsidy to Authorities) Amendment Order 2025
This Order, made by the Secretary of State with the consent of the Treasury, amends the Income-related Benefits (Subsidy to Authorities) Order 1998 to revise how housing benefit subsidy is calculated and paid to local authorities in England, Wales, and Scotland.
Key changes include updating the Housing Benefit Assurance Process deadline, allowing local authorities flexibility in limiting deductions for historic overpayments, substituting the schedules detailing administration subsidy sums for the 2024-2025 relevant year, adjusting incentive payments for verification schemes, and setting specific deduction figures for Welsh authorities for the 2025/2026 relevant year.
Arguments For
The Order updates key deadlines and references for the Housing Benefit Assurance Process (HBAP), ensuring administrative procedures align with current timelines.
It introduces flexibility in recovering overpayments from subsidy payments for earlier years, allowing authorities to limit deductions if appropriate, potentially easing local authority financial management.
The Order updates the subsidy calculation amounts for the 2024-2025 relevant year by substituting Schedule 1, reflecting current funding needs or administrative structures.
It revises additional subsidy amounts related to the Verify Earnings and Pension Alerts Service (VEPS) and the Housing Benefit Award Accuracy Initiative (HBAAI), incentivizing greater accuracy in benefit awards.
Specific amendments for authorities in Wales update the rent rebate limitation deduction figures for the 2025/2026 relevant year, reflecting changes in Welsh housing financial planning.
Arguments Against
Frequent amendments to subsidy orders, requiring substitution of schedules and updates to circular references, may increase administrative overhead and complexity for local authorities tracking compliance.
Adjusting the limit on deductions for historical overpayments could potentially reduce the recovery rate of improper payments, affecting the overall accuracy of the benefits system, depending on how 'appropriate' is interpreted.
The document relies on external circulars (e.g., HB S8/2024, HB A5/2024) for defining key subsidy elements, necessitating reference to multiple documents to fully understand the financial implications.
The changes to Welsh housing subsidy calculations (Article 8) involve varying the rebate proportion figure and establishing new 'O' and 'P' values, which may cause disruption or require recalculation for the 2025/2026 year in Wales.
The Secretary of State makes this Order in exercise of the powers conferred by sections 140B(1), (3), (4) and (4A), 140C(1), (1A), (2), (3) and (4), 140F(2) and 189(1), (4), (6) and (7) of the Social Security Administration Act 1992.
In accordance with section 189(8) of that Act, the Secretary of State has obtained the consent of the Treasury.
In accordance with section 176(1)(b) of that Act, the Secretary of State has consulted with organisations appearing to the Secretary of State to be representative of the authorities concerned.
The Secretary of State issues this Order using specific powers granted under the Social Security Administration Act 1992.
Before making the Order, the Secretary of State sought and received the necessary consent from the Treasury, as required by law.
The Secretary of State also consulted with relevant organizations representing local authorities before enacting these changes.
- Citation, commencement and extent
(1) This Order may be cited as the Income-related Benefits (Subsidy to Authorities) Amendment Order 2025 and comes into force on 4th November 2025.
(2) This Order extends to England and Wales and Scotland.
The legal name of this legislation is the Income-related Benefits (Subsidy to Authorities) Amendment Order 2025, and it became legally effective on November 4th, 2025.
This Order applies to the jurisdictions of England, Wales, and Scotland.
- Amendment of the Income-related Benefits (Subsidy to Authorities) Order 1998 and application of amendments
(1) The Income-related Benefits (Subsidy to Authorities) Order 1998 is amended in accordance with articles 3 to 8.
(2) Articles 3, 5, 6 and 7 and the Schedule apply for the purpose of determining subsidy payable for the relevant year beginning on 1st April 2024.
(3) Article 8 applies for the purpose of determining subsidy payable for the relevant year beginning on 1st April 2025.
This legislation modifies the existing Income-related Benefits (Subsidy to Authorities) Order 1998 through the actions detailed in Articles 3 through 8.
Changes detailed in Articles 3, 5, 6, 7, and the attached Schedule are used when calculating subsidy payments for the financial year that started on April 1st, 2024.
Article 8 specifically details adjustments that apply when calculating subsidy payments for the financial year starting on April 1st, 2025.
- Housing Benefit Assurance Process
In article 2 (interpretation of Parts 2 and 4), in the definition of “HBAP”, for “1st April 2024” substitute “28th April 2025”.
This article amends the definition of the Housing Benefit Assurance Process (HBAP) within the 1998 Order.
The date reference associated with HBAP is changed from April 1st, 2024, to April 28th, 2025, updating the relevant administrative timeframe.
- Deductions to be made in calculating subsidy: overpayment
In article 19 (deductions to be made in calculating subsidy)—
(a) in paragraph (1), for “paragraph (4)” substitute “paragraphs (3A), (3B) and (4)”;
(b) after paragraph (3) insert—
“(3A) Paragraph (3B) applies for the purpose of determining the amount of subsidy payable for a relevant year beginning on or after 1st April 2024.
(3B) Where an overpayment of a type specified in any of sub-paragraphs (e) to (g) of paragraph (1) was made in any earlier relevant year, the amount deducted for that overpayment under article 11(2)(b) may, where the authority considers it appropriate, be limited to the amount of subsidy calculated in accordance with article 13(b) which is attributable to that overpayment.
(3C) In paragraph (3B), “earlier relevant year” means a relevant year earlier than that in which the deduction takes place.”.
This amendment modifies the rules regarding deductions from subsidy payments when Housing Benefit overpayments occurred.
Paragraph (1) of Article 19 is updated to cross-reference new paragraphs (3A) and (3B) concerning overpayment deductions.
New provisions are inserted stating that for relevant years starting on or after April 1st, 2024, if a specified overpayment happened in a previous 'earlier relevant year,' the authority can choose to limit the deduction amount.
This limit is set to the amount of subsidy that was specifically linked to that overpayment under Article 13(b).
- The amount of an authority’s subsidy
For Schedule 1 (sums to be used in the calculation of subsidy) substitute the Schedule 1 set out in the Schedule to this Order.
This article replaces Schedule 1 of the 1998 Order entirely, which outlines the specific financial figures utilized when calculating the subsidy due to a local authority.
The new schedule containing these recalculated sums is provided in the Schedule attached to this amending Order.
- Additional amount of subsidy: Verify Earnings and Pension Alerts Service
In Schedule 1ZB (additional amount of subsidy: Verify Earnings and Pension Alerts Service), in paragraph 2 (additional amount: relevant year beginning with 1st April 2024)—
(a) for “is the amount” substitute “is the sum of the amounts”;
(b) at the end insert “and in the Housing Benefit Circular HB S8/2024 first published by the Department for Work and Pensions on 20th December 2024”.
This amendment affects the extra subsidy payment authorities receive for utilizing the Verify Earnings and Pension Alerts Service (VEPS), specifically for the year starting April 1st, 2024.
The calculation method changes from a single 'amount' to the 'sum of the amounts' to be added.
Furthermore, the calculation must now incorporate figures detailed in the Department for Work and Pensions (DWP) Housing Benefit Circular HB S8/2024, published on December 20th, 2024.
- Additional amount of subsidy: Housing Benefit Award Accuracy Initiative
In Schedule 1ZC (additional amount of subsidy: Housing Benefit Award Accuracy Initiative)—
(a) in paragraph 1 (interpretation), in the definition of “HBAAI”, for “Housing Benefit Circular HB A4/2023” to the end of that definition substitute “Housing Benefit Circular HB A5/2024 first published by the Department for Work and Pensions on 23rd April 2024”;
(b) in paragraph 2 (additional amount: relevant year beginning on 1st April 2023)—
(i) in the heading, for “1st April 2023” substitute “1st April 2024”;
(ii) for “1st April 2023” substitute “1st April 2024”;
(iii) for “Housing Benefit Circular” to the end substitute “Housing Benefit Circular HB S5/2024 first published by the Department for Work and Pensions on 23rd April 2024”.
This article modifies the additional subsidy payments available under the Housing Benefit Award Accuracy Initiative (HBAAI), which rewards efforts to verify claimant data.
Firstly, the definition of HBAAI in paragraph 1 is updated to reference the latest directive, DWP Housing Benefit Circular HB A5/2024, dated April 23rd, 2024, replacing the older A4/2023 reference.
Secondly, the provisions specific to the subsidy amount in paragraph 2 are shifted forward, changing the reference year from one beginning April 1st, 2023, to one beginning April 1st, 2024, and referencing the relevant DWP Circular HB S5/2024.
- Rent rebate deductions from the subsidy of an authority in Wales
In Schedule 4A (rent rebate limitation deductions (Housing Revenue Account dwellings): authorities in Wales)—
(a) in paragraph 3(2), for “1st April 2024 is 0.397” substitute “1st April 2025 is 0.369”;
(b) for paragraph 4, but not including the heading, substitute—
“4. The amounts for the relevant year beginning on 1st April 2025 for the purposes of paragraph 2 are as follows—
| Local authority | (1) Specified amount “O” (£) | (2) Guideline rent increase “P” (£) | | :--- | :--- | :--- | | Caerphilly County Borough Council | 121.35 | 3.58 | | Cardiff City Council | 136.94 | 3.78 | | Carmarthenshire County Council | 120.50 | 3.41 | | Denbighshire County Council | 121.63 | 3.18 | | Flintshire County Council | 127.12 | 5.04 | | Isle of Anglesey County Council | 122.29 | 4.96 | | Pembrokeshire County Council | 123.35 | 4.51 | | Powys County Council | 124.51 | 3.83 | | Swansea City Council | 122.24 | 3.01 | | Vale of Glamorgan Council | 135.42 | 5.18 | | Wrexham County Borough Council | 125.17 | 3.64”.
Article 8 updates Schedule 4A, which governs rent rebate limitation deductions for local housing revenue account dwellings specifically in Wales.
In paragraph 3(2), the rent rebate proportion figure for the year commencing April 1st, 2025, is revised from 0.397 to 0.369.
Paragraph 4 is entirely replaced to set out the specific financial amounts ('O' and 'P') used for calculating deductions for the relevant year starting April 1st, 2025, listing these values for eleven Welsh councils.
Schedule Substitution of Schedule 1 to the Income-related Benefits (Subsidy to Authorities) Order 1998
Article 5
Schedule 1 Sums to be used in the calculation of subsidy
Relevant Year 2024-2025
England
... [List of local authorities and their Administration subsidy (£)] ...
Wales
... [List of local authorities and their Administration subsidy (£)] ...
Scotland
... [List of local authorities and their Administration subsidy (£)] ...
This Schedule substitutes the entirety of Schedule 1 from the 1998 Order, which details the fixed administration subsidy amounts payable to local authorities.
These figures are specifically labelled for the 'Relevant Year 2024-2025' and are broken down by jurisdiction: England, Wales, and Scotland, listing the exact subsidy poundage for each council.
Explanatory Note
This Order amends the Income-related Benefits (Subsidy to Authorities) Order 1998 (“the 1998 Order”) which provides for the calculation and payment of housing benefit subsidy to local authorities in England, Wales and Scotland which administer housing benefit. Sections 140C(4) and 140F(2) of the Social Security Administration Act 1992 (c. 5) authorise the making, revocation or varying of an Order before, during or after the year to which it relates.
Article 3 updates the definition of “HBAP” in article 2 of the 1998 Order to refer to the appropriate version of the Housing Benefit Assurance Process, published on 28th April 2025.
Article 4 provides that the local authority may, in calculating subsidy for the relevant year, limit the amount of deductions for overpayments made in any earlier relevant years to the amount of subsidy local authorities received in respect of those overpayments.
Article 5 and the Schedule substitute Schedule 1 to the 1998 Order, which prescribes the sums used in the calculation of subsidy for the year beginning 1st April 2024.
Article 6 amends Schedule 1ZB to the 1998 Order which prescribes a system for the making of additional payments of subsidy to authorities administering alerts relating to the earnings and pension entitlement of claimants for housing benefit. The amendment provides that the additional amount of subsidy relating to those alerts for the year beginning on 1st April 2024 includes the amounts specified in the Housing Benefit Circular published on 20th December 2024.
Article 7 amends Schedule 1ZC to the 1998 Order which prescribes a system for the making of additional payments of subsidy to authorities verifying the accuracy of information held in respect of the household, income and capital, and general financial circumstances of claimants for housing benefit. The amendment to paragraph 1 of that Schedule updates the definition of “HBAAI” to refer to the most recent version of the Housing Benefit Award Accuracy Initiative, published on 23rd April 2024. The amendments to paragraph 2 of that Schedule update the Schedule to refer to the additional amounts of subsidy payable for the year beginning on 1st April 2024. The amounts were notified by the Secretary of State to local authorities on 23rd April 2024.
Article 8 amends Schedule 4A to the 1998 Order, both to update the rebate proportion figure for 2025/2026 to 0.369 and to set out revised specified amounts “O” and guideline rent increases “P” used when calculating deductions from subsidy under paragraph 2 of Schedule 4A. The amendments to Schedule 4A have effect for the purposes of determining subsidy payable for the year beginning on 1st April 2025 for authorities in Wales.
Hard copies of the circulars referenced in this Order are available by writing to the Department for Work and Pensions, Local Authority Partnership, Engagement and Delivery Division, Peel Park Phase 2, First Floor Blue Zone, Brunel Way, Blackpool, Lancashire FY4 5ES or by emailing [email protected].
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.
This explanatory note confirms the instrument amends the 1998 Order concerning housing benefit subsidy payments across England, Wales, and Scotland, noting the legal power to make retrospective or prospective amendments.
Article 3 updates the definition relating to the Housing Benefit Assurance Process (HBAP) to reference a publication date of April 28th, 2025.
Article 4 allows local authorities to cap historical overpayment deductions against current subsidy amounts if deemed appropriate.
Article 5 and the Schedule update the prescribed sums used for calculating the subsidy for the financial year starting April 1st, 2024.
Article 6 adjusts the additional subsidy for the Verify Earnings and Pension Alerts Service (VEPS), incorporating figures from a December 20th, 2024 DWP Circular.
Article 7 updates the additional subsidy linked to the Housing Benefit Award Accuracy Initiative (HBAAI) by referencing the latest initiative version published April 23rd, 2024, and applies the associated payment amounts to the year beginning April 1st, 2024.
Article 8 specifically updates rent rebate limitation deductions for Welsh authorities, changing the 2025/2026 rebate proportion to 0.369 and replacing the financial factors ('O' and 'P' values) for subsidy determinations starting April 1st, 2025.
Contact details are provided for obtaining hard copies of the referenced circulars, and the note confirms no significant impact assessment was required for this instrument.