Pay rises, bonuses and windfalls in an IVA
You must tell your supervisor about extra income and money you come into during an IVA. The standard terms let you keep part of it: extra pay worth 10% of your normal take-home pay, half of anything above that, and windfalls of £500 or less.
An IVA is built on a snapshot of your finances: your income, your costs and what is left over. Creditors agree to accept less than they are owed because that snapshot is accurate and because the terms share any improvement with them. That is why extra money has to be declared. This guide sets out exactly what the IVA Protocol 2025 standard terms require, how much you keep, and what happens if something is not declared.
The rules below are the standard terms for protocol IVAs in effect from 1 July 2025. Older IVAs and bespoke IVAs can differ, so check your own proposal.
Why does your supervisor need to know about extra money?
Your monthly payment comes from a budget drawn up using the Standard Financial Statement, covering reasonable living costs for your household. What is left goes to your creditors. The proposal your creditors voted on assumed that budget was accurate and that you would follow the standard terms on extra income.
So declaring extra money is not optional, and it is not a sign you are in trouble. It is part of the deal. The terms are also designed so that you keep part of most extra money, which means working more or earning more still leaves you better off.
Overtime, bonuses and commission: the 10% and 50% rule
If you receive overtime, a bonus, commission or other extra income not already in your IVA, and it is more than 10% of your normal take-home pay:
- tell your supervisor within 14 days of receiving it
- pay in 50% of the amount above that 10% within 14 days of telling them
The standard terms say that failing to disclose or pay these amounts “will be considered a breach of the arrangement”.
| Hypothetical month (normal take-home pay £1,800, so 10% is £180) | Extra income | Amount above 10% | Paid into IVA | You keep |
|---|---|---|---|---|
| Small amount of overtime | £150 | £0 | £0 | £150 |
| A busy month of overtime | £300 | £120 | £60 | £240 |
| Annual bonus | £1,000 | £820 | £410 | £590 |
The same rule covers income from a new source, such as a second job or self-employed work alongside your main job. See starting a business during an IVA.
Pay rises and the annual review
A pay rise is dealt with differently from one-off extra money. The key facts document says that if you “receive a pay increase … you must tell your Insolvency Practitioner”. You must also keep your supervisor informed of your employment details, including any new job.
Your payment is then reset at your annual review. On or just before each anniversary of your IVA, you provide evidence such as P60s, payslips and bank statements. If your disposable income has gone up, your payment rises by 50% of the increase, starting one month after the review.
Hypothetical example: Tom’s IVA payment is £250 a month. At his annual review, a pay rise has increased his disposable income by £100 a month after allowing for his higher costs. His payment goes up by half of that, £50, to £300. He keeps the other £50.
The review looks at your costs as well as your income. If your rent, bills or childcare have risen, those count too. Not taking part in the annual review is recorded and can lead to your IVA being terminated. For how the budget is built, see how much an IVA leaves you to live on.
Redundancy
If you are told you are being made redundant, the standard terms say you must:
- tell your supervisor within 14 days of the notice
- tell them the amount of your redundancy entitlement within 14 days
- pay in any redundancy pay above 6 months’ net take-home pay within 14 days of receiving it
Hypothetical example: Rhiannon takes home £2,000 a month. Six months’ net pay is £12,000. Her redundancy payment is £16,000, so £4,000 goes into the IVA and she keeps £12,000 to live on while she looks for work.
When you find a new job, the supervisor will review your payments, and the standard terms say there will be “an expectation that any remaining redundancy funds will be paid into the arrangement”. So the money you keep is there to support you between jobs, not to be put aside.
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Windfalls, gifts and inheritances
Any asset, windfall or inheritance worth more than £500 that you acquire or receive during the IVA is an “after-acquired asset”. You must tell your supervisor as soon as reasonably possible, and they can claim it for the IVA, but only as much as is needed to repay your creditors 100p in the pound plus the costs of the IVA.
Examples include:
- an inheritance (see what happens if you inherit money during an IVA)
- a lottery win, prize or premium bond win
- a large gift of money or property
- a compensation payout, such as car finance redress (see IVAs and car finance)
Tax refunds follow their own rule: HMRC first sets them against tax you owe, and any surplus paid to you must be passed on to your supervisor.
If a windfall is big enough to pay your creditors in full plus costs, your IVA can end early without statutory interest being added. See paying off an IVA early.
What happens if you do not declare something?
There is no safe way to keep money back from an IVA. Not declaring income or a windfall breaks the terms you signed, and it can cost you the IVA and more.
Under the standard terms, you are in breach if you provide information that is false or misleading in any material detail or leaves out something material, if you fail to disclose or pay in extra income, or if you fail to meet any other obligation. The supervisor sends a notice of breach giving you one month to put it right. If you do not, the IVA can be terminated.
If your IVA is terminated:
- creditors can pursue the full balance of your debts again, and you become liable for the interest and charges that built up during the IVA
- the supervisor or any creditor can petition the court for your bankruptcy, and only the court can make that order
- you get no refund of what you have paid in
At the start, the stakes are higher still. Making a false representation, or doing or leaving out anything fraudulently, to get creditors to approve an IVA is a criminal offence under section 262A of the Insolvency Act 1986, even if the IVA is not approved. That covers hiding income, savings or money you expect to receive. See what happens if an IVA fails.
What if you have already missed something?
Tell your supervisor now, in writing, with the details and dates. Putting it right yourself is far better than it coming to light at a review. A notice of breach gives a month to remedy it, and your supervisor will explain what needs to be paid.
What people commonly get wrong
- “Any extra money goes to creditors.” Under the standard terms you keep at least half of most extra income, and all of it below the 10% threshold.
- “Small windfalls have to be handed over.” The after-acquired asset rule covers amounts over £500.
- “I’ll mention the pay rise at my review.” Tell your supervisor when it happens. The payment itself is reset at the review.
- “Redundancy pay is mine to keep.” Only up to 6 months’ net take-home pay, and remaining funds are expected to be paid in once you find work.
What to do next
- Find your IVA proposal and check which terms apply. If it is a protocol IVA from 1 July 2025, the rules above apply.
- Keep your payslips and a note of any overtime, bonus or other income as it arrives, so you can report anything over 10% within 14 days.
- Tell your supervisor straight away about a pay rise, a new job, redundancy notice or any money you come into.
- If you are worried you cannot keep up, or want an independent view of your options, free, impartial debt advice is available from MoneyHelper, StepChange, Citizens Advice and National Debtline: see where to get free debt advice. If an IVA is no longer working, compare the alternatives in debt solutions compared, and see more guides in life in an IVA.
Common questions
Do I have to declare overtime below the 10% threshold?
Under the standard protocol terms, the duty to report within 14 days applies where extra income is more than 10% of your normal take-home pay. Smaller amounts will still show on the payslips and bank statements you provide at your annual review.
Does a tax refund go into my IVA?
Under the standard protocol terms, HMRC repayments are first set against any tax you owe, and any surplus paid to you must then be passed to your supervisor for the IVA.
Can my supervisor see my bank account?
They do not have live access, but you provide bank statements, payslips and other evidence when your IVA is set up and at every annual review. The IVA depends on that information being complete.
Does my pay rise mean my IVA payment goes up straight away?
Tell your supervisor about it. Under the standard terms, your payment is reviewed at the annual review and goes up by 50% of any increase in your disposable income, one month after the review.
Related guides
- What happens if you inherit money during an IVA? How inheritances are treated in an IVA, how much you keep, and what to do if you inherit.
- How much does an IVA leave you to live on? How your IVA budget is worked out, what counts as essential, and how yearly reviews change it.
- What happens if an IVA fails? How often IVAs fail, the breach process, what happens afterwards and the options that are left.
- Can you pay off an IVA early? The ways to end an IVA early, how a full and final settlement works, and what paying early does not change.