Direct Payments and personal budgets: how to actually use them

What Personal Budgets and Direct Payments actually are

Two related concepts, often confused.

A Personal Budget is the amount of money the LA (or ICB, or social care service) has identified to meet your child's needs as set out in their EHCP. It is a figure, written into the plan (Section J).

A Direct Payment is one way of receiving and spending that money. The funds are paid into your account (as parent of a child under 16, you receive them on the child's behalf), and you commission the support directly.

The legal basis is in section 49 of the Children and Families Act 2014 and the SEND Regulations 2014, Part 6. Statutory guidance is in chapter 9 of the SEND Code of Practice 2015 (paragraphs 9.95-9.122). (CFA 2014 s.49; SEND Code 2015 ch.9. See References.)

The four ways to take a Personal Budget

You don't have to manage the money to benefit from a Personal Budget. Four options.

1. LA / ICB-managed. The local authority or Integrated Care Board (the NHS commissioning body) holds the money and commissions services on your behalf. No paperwork for you.
2. Third-party-managed. An organisation (often a Direct Payment support service or a specialist charity) manages the budget on your behalf. They handle payroll and audit; you choose the services.
3. Direct Payment. The funds come to you. You employ assistants, pay providers, keep records.
4. Mixed. Some elements managed by the LA (e.g., a specialist therapy contract), others as Direct Payment (e.g., a personal assistant). Often the most workable arrangement.

What can be funded (and what can't)

Personal Budgets can fund support that goes beyond what is provided in the standard school day or NHS commissioning.

Commonly funded through Direct Payments:

• Personal assistants (PAs). Hours of 1:1 support after school, at weekends, in school holidays. Often the most useful single use.
• Specialist holiday and weekend clubs. SEND -specific provision your child can attend without you.
• Therapies not available on the NHS. SaLT top-ups, sensory-integration OT, specialist play therapy.
• Specialist tutoring. Subject support, literacy programmes (Orton-Gillingham, structured literacy), maths.
• Equipment. Sensory equipment, AAC (Augmentative and Alternative Communication) devices, specialist seating, adapted bikes.
• Family respite via short-break services or named carers.
• Transport in specific cases.

What Direct Payments cannot fund:

• School fees for a maintained or Section 41 placement (that is paid directly by the LA to the school).
• Anything already provided in the school day under Section F.
• Mortgage payments, rent, household bills.
• Anything that would breach safeguarding (e.g., paying an unvetted relative as a PA for very young children).

Three pots: education, health, social care

A Personal Budget can have up to three components, each governed by different rules.

How to request one

Two windows: at the drafting of the EHCP, and at any annual review.

1. Ask in writing. Either as part of your parent contribution to the draft plan, or as a separate written request at any time. Cite section 49 of the CFA 2014.
2. Specify what you want it for. “A Personal Budget for 4 hours per week of a PA after school to support social communication and access to community activities,” rather than “a Personal Budget.”
3. Specify the management option you want. Direct Payment, third-party-managed, LA-managed, or mixed.
4. If the LA refuses, they must explain in writing. Refusal is appealable in the SEND Tribunal where it relates to provision in Section F. Other components are challenged via the LGSCO or through judicial review where relevant.
5. If approved, the LA will work out the sum, set up a Direct Payment Agreement, and arrange disbursement.

How much money is involved

Amounts vary widely by LA, by need, and by component. Some rough orientation figures.

Typical UK ranges (as of 2025/26, varying significantly by area):

• A PA on social care Direct Payments: 4-8 hours per week, at £13-£18 per hour, working out at £3,000-£7,500 per year.
• Specialist holiday club: typically £500-£1,500 per holiday week, claimable in social care Direct Payments where the assessed need supports it.
• Specialist therapy top-up: £1,000- £5,000 per year for additional SaLT or OT.
• Education Direct Payments (rare): typically only used for EOTAS packages or specific curriculum elements, can run into tens of thousands of pounds per year.

Amounts are calculated on a needs basis, not as a flat allowance. The LA must show how the amount has been calculated.

Running a Direct Payment in practice

You become a small employer or commissioner. This sounds harder than it is, but it needs setup.

1. Open a separate bank account. The Direct Payment must go into a dedicated account; mixing with household funds is not allowed.
2. Use the LA's Direct Payment support service. Most areas have one, often run by a local disability charity. Free to use. They handle payroll, HMRC, employer's liability insurance, the audit.
3. Recruit your PA. Often a family friend, a student in a relevant degree (social work, education, psychology), or via specialist PA agencies. DBS-check is required.
4. Keep records. Timesheets, invoices, receipts. Quarterly statement to the LA showing how the money was spent.
5. The annual review. The Direct Payment arrangement is reviewed every year. Increase, decrease or change as needs change.

Common misconceptions and what they get wrong

Five things families and professionals often believe that aren't quite right.

• “Personal Budgets are only for severely disabled children.” No. Any child with an EHCP can request one. The assessed need decides the amount.
• “You can only use it for support inside the home.” Not true. PA support to access community activities, holiday clubs, social events all count.
• “If you take a Direct Payment you lose benefits.” Direct Payments are not income; they don't affect Universal Credit, DLA, Carer's Allowance, or housing benefit.
• “Direct Payments are taxed.” Not for the parent receiving them on behalf of a child. The PA you employ will be taxed via PAYE as your employee.
• “You have to use a registered agency.” No. You can employ individuals directly, with appropriate DBS checks and payroll arrangements.

What to do this week

Three things.

1. Identify the support you would buy. Be specific. “4 hours of PA support each Saturday so our child can attend football with adult support” is better than “help.”
2. Email the LA SEND team with a formal request for a Personal Budget under s.49 CFA 2014. Specify what you want, the management option, and ask for a written response within 15 working days.
3. Find your local Direct Payment support service. A quick search for “[your council] direct payment service” will surface it. Ring them; they will tell you how the local process works.