Banks are not allowed to use housing benefit, a test and trace support payment or any other income related benefits to repay an overdraft as the law provides that a customer needs a minimum amount of money to live on. The housing benefit payment is not actually the claimant’s money, as they are just the agent to pass the money to their landlord. If your bank does use this money or a test and trace support payment to offset an overdraft you should seek legal advice or contact your local Citizens Advice Bureau for further help and claim back any charges.
Right of appropriation
Allows you to assign any funds entering your account, inclusive of test and trace support payments, to specific events and needs, not just benefits.
Benefit claimants receiving direct payment of housing benefit into their bank accounts are able to protect those payments from being used by their bank to meet authorized or unauthorised overdrafts built up by you and guarantee that they are used only to pay the rent to your landlord.
Even if your account is overdrawn, you can choose how any further money paid into your account for example test and trace support payment is used (for example to pay rent) using this 'first right of appropriation'. It is necessary, however, for you to contact your bank with new instructions.
In the written instructions you give your bank, you should ensure that you make it clear if you wish any regular payments or future deposits to your account to be used to pay for specific items. If you do not make this clear, you will have to give new instructions each time a deposit is made.
- Sample of an appropriation letter to your bank (13kb, PDF)
- Sample of a complaint letter to your bank (13kb, PDF) regarding your housing benefit being used to repay an overdraft.