For a Debt Relief Order in England and Wales, your surplus income must be £75 or less per month, calculated by subtracting reasonable living costs from your total household income. That surplus income calculation for a DRO uses fixed rules: a single national framework for expenses, a strict cap with no rounding, and a line-by-line review of what actually comes in and goes out each month. Land a penny over £75 and the application fails.1GOV.UK. Debt Relief Orders: Guidance for Debt Advisers
What Counts as Income
The calculation starts by totalling every pound coming into your household each month. That means your net wages after income tax and National Insurance, plus any benefits you receive such as Universal Credit, Jobseeker’s Allowance, or Employment and Support Allowance. Regular pension income counts too.
Household income is not just your income. If another adult living with you contributes to shared costs, that contribution is added to the total. The same applies to regular financial support from family members, whether they call it a gift or not.
Disability Benefits
Personal Independence Payment and Disability Living Allowance get special treatment. Rather than being excluded outright, the approved intermediary records the payment as income and then enters the same amount as an expense under adult care costs. The two figures cancel each other out, so money intended for extra care or mobility needs does not inflate your surplus.1GOV.UK. Debt Relief Orders: Guidance for Debt Advisers
What Counts as Allowable Spending
Once your income is established, the next step is deducting your reasonable living costs. The tool used for this is the Standard Financial Statement, a universal income-and-expenditure framework maintained by the Money and Pensions Service. It sets a single set of spending guidelines that debt advisers across the UK follow, which keeps DRO assessments consistent regardless of who you work with.2Standard Financial Statement. What Is the Standard Financial Statement
The SFS sets guideline amounts for variable categories like groceries, personal care, clothing, and household goods. If your spending in any of these areas sits within the guideline range, it will typically be accepted without question. Spending above the guideline is not automatically rejected, but you will need to show the higher amount is genuinely necessary for your circumstances.
Fixed Costs
Rent or mortgage payments, council tax, and utility bills for heating, water, and electricity are deducted at their actual cost. Transport expenses for getting to work or medical appointments also fall here, provided they are documented and reasonable. These fixed obligations usually form the largest chunk of your allowable spending.
What Does Not Count
Streaming subscriptions, gym memberships, dining out, and other non-essential items cannot be deducted. The assessment is designed to support a basic standard of living while identifying what is genuinely left over. This is where advisers spend the most time: separating the expenses that reflect real need from those that reflect habit.
How the £75 Cap Works
The calculation itself is simple subtraction. Total monthly income minus total allowable expenditure equals your surplus. If that figure is £75.00 or less, you meet the financial condition for a DRO. If it lands at £75.01, you do not. There is no rounding, no discretion, no wiggle room.1GOV.UK. Debt Relief Orders: Guidance for Debt Advisers
The threshold was raised from £50 to £75 per month as part of changes that took effect in 2024, broadening access for people who were previously just over the line.3legislation.gov.uk. Insolvency Act 1986 – Part 7A The strictness of the cap is the point. A DRO is meant for people who genuinely have almost nothing left at the end of the month. If you have more than £75 spare, the system expects you to use some form of repayment plan instead.
Why Small Details Decide the Outcome
Because the cap is absolute, the accuracy of your expense figures becomes the single most important part of the application. Forgetting a regular prescription cost, underestimating your energy bills, or overlooking a school meal payment can push your surplus above the line when it should be below it. The reverse is also true: claiming spending you cannot document risks the figures being cut back on review, quietly moving you over £75.
Advisers work through this in detail. Expect to bring bank statements, payslips, benefit letters, and bills to your appointment. The adviser will go through statements line by line to catch anything you have missed, then enter the verified figures into the Insolvency Service’s online portal. The Official Receiver, the government official who makes the final decision, reviews the financial assessment to confirm you fall within the £75 limit before granting the order.4GOV.UK. Technical Guidance for Official Receivers: 60. Debt Relief Orders
If Your Surplus Changes During the DRO
The £75 threshold does not stop mattering once the order is granted. A DRO lasts 12 months, and throughout that period you have a legal duty to notify the Official Receiver as soon as reasonably practicable if your income rises, you acquire property, receive an inheritance, or come into any lump sum.5legislation.gov.uk. Insolvency Act 1986 – Section 251J
If your surplus climbs above £75 after the order is made, a creditor can formally object. Even without a creditor objection, the Official Receiver can independently investigate and decide whether to revoke or amend the order. Revocation means the debts come back to life and creditors can resume collection.4GOV.UK. Technical Guidance for Official Receivers: 60. Debt Relief Orders
Failing to report changes, or providing inaccurate information at the outset, can lead to worse outcomes than simple revocation. The Official Receiver can seek a Debt Relief Restrictions Order, which imposes bankruptcy-style restrictions for between 2 and 15 years. A DRRO does not stop your original debts from being written off at the end of the 12-month period, but the extended restrictions can severely limit your financial life for years afterwards.6GOV.UK. Guidance for Creditors Listed in a Debt Relief Order (DRO)
Where the £75 Test Sits Among Other Conditions
The surplus income test is one of several eligibility conditions, not the whole gate. Before the calculation matters, you also need qualifying debt under £50,000, assets worth less than £2,000 (excluding essential household items and work tools), and a vehicle worth less than £4,000. Homeowners cannot apply, even in negative equity. You must have lived or worked in England and Wales within the last 3 years, not be currently bankrupt or in an individual voluntary arrangement, and not have had a DRO in the last 6 years.7GOV.UK. How to Get a Debt Relief Order (DRO) Meeting the £75 cap does no good if any of the others fail; falling below £75 is necessary but not sufficient.