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Bankruptcy Living Expenses Allowances

Published: 19 March 2024

Monthly household expenses depicting bankruptcy living expenses allowances

Use this guide to find out exactly what bankruptcy living expenses allowances are acceptable.

You will need this information when you complete your your application form. The Official Receiver uses your figures to determine whether or not you will be required to make payments towards your debt for the next 3 years (an Income Payment Agreement).

The information here will help you get your living expenses budget right. Get it wrong, and you could be asked to pay more than you can afford.

Contents

Why is it vital to get your bankruptcy living expenses allowances right?

When you go bankrupt, you have to give the Official Receiver a detailed monthly income and expenses budget. They use this to assess whether you have any money left over each month (a surplus income).

If you have a surplus, you will have to pay 100% of this this towards your debt for 3 years. This is known as getting an Income Payment Agreement (IPA).

It is therefore extremely important that you use the correct living expenses allowances when completing your budget.

Using the allowances in this guide will mean you avoid presenting a budget that is too low. If you do this correctly, you will not be asked to make an IPA payment that you can’t afford.

Agreed bankruptcy living expenses allowances – 2024

Your budget is made up of many different types of living expenses. Generally speaking these can be categorised as either fixed or variable.

  • Fixed expenses:
    These are things like rent or mortgage payments, council tax and utility bills. You can take these figures directly from your bank statement. Note: Your current year council tax payments might be included as a debt in your bankruptcy and written off.
  • Variable expenses:
    These are things like food shopping, petrol and child expenses. The amount you need to include for these depends on your circumstances and may well change from month to month.

The list below highlights some of the most common variable expenses that you should include in your budget together with suggested amounts.

2024 living expenses allowances agreement

Housekeeping – Groceries & Toiletries

Single person: £250/mth
Couple: £400/mth
Each additional child: £100/mth

Additional meals at work budget: £45/mth (per working adult)
Alcohol: £20/mth (per working adult)

Child Living Expenses Allowances

School lunches:
These are calculated based on the daily amount per child per week x 38 school weeks and then averaged over a year (by dividing by 12)

Child Maintenance:
In the absence of a court order the Official Receiver will allow an amount as calculated by the Government’s online CMS calculator.

Child Care (Nursery; Child Minder etc):
Include the figure you are charged. Be ready to justify with receipts if necessary

Other child expenses:
School trips and clubs: £15/month per child
School Uniform (in addition to clothing budget): £20/month per child
Pocket Money: £10/mth per child

Clothes

Single person: £40/mth
Couple: £60/mth
Each additional child: £20/mth

Hair Dressing

Single person: £15/mth
Couple: £25/mth
Each additional child: £5/mth

Entertainment and Hobbies

Single person: £30/mth
Couple: £50/mth
Each additional child: £15/mth

Travel

Car Expenses:
Car petrol / Diesel: Up to £200/mth per vehicle unless justified.

Public Transport:
Include what you spend on regular bus, train or taxi fares

Other Expenses

Dental & Optical: (Covering annual check ups and contribution towards glasses)
Single person: £20/mth
Couple: £40/mth

Medical & Prescriptions:
Variable depending on personal expenditure

Pets:
Variable but reasonable amounts can be included for pet food, vet bills and pet insurance

The above figures are provided for guidance purposes only. The living expenses amounts you submit will be subject to review by the Official Receiver and may be revised up or down.

What if you spend more than the bankruptcy living expenses allowances?

The figures highlighted above are ultimately a guide. If there are areas of your budget where you feel you need to spend more, you should include higher figures. However you need to be able to justify them.

For example if you or a member of your family has particular dietary requirements which cost more, you should include the amount you feel you need to cover this.

If you live abroad where the cost of living is higher, you should include relevant amounts. As long as you have a reasonable explanation, they should be accepted.

However, if you include amounts which exceed the figures suggested without reasonable explanation, there is a high chance that the Official Receiver will not accept them and revise them down. This could lead them to calculate you have surplus income and require that you pay an IPA.

A budget for financial emergencies does not exist in a bankruptcy living expenses budget. If possible, it is always sensible to save a little from your agreed figures each month which can then be used in an emergency.

spending more than the allowance living expenses allowances

Does the Official Receiver have access to your bank account?

You don’t have to worry about this. The Official Receiver does not have access to your bank account. They don’t monitor how you spend your money on a month by month basis. As far as they are concerned, once your living expenses budget is agreed, it is up to you to manage it.

That said, the OR can ask you to provide an updated income and expenses budget at any time during the year you are bankrupt.

This will often happen if you are self employed.

You may need to open a new basic bank account to use during your bankruptcy. This is always the case if you owe your current bank money. However it is also necessary if you are using a current account.

access to bank account living expenses allowances

What happens if your living expenses budget changes during bankruptcy?

During the year you are bankrupt, you are obliged to tell the Official Receiver if your income goes up or living expenses fall.

Where this happens, they will send you a new income and expenses questionnaire to complete. This is called an IPOQ (Income Payment Order Questionnaire).

They need to review your new income and expenses figures to establish whether you now have a surplus income as a result of the change. If so, an Income Payment Agreement will be introduced at that time.

When completing an IPOQ, refer back to the Bankruptcy Guide bankruptcy living expenses allowances. As well as changes in your income, make sure you include any increase in your expenses as well.

   Written by James Falla

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