Enabling MSD to more quickly use PAYE income information provided by Inland Revenue

The Ministry of Social Development (MSD) and Inland Revenue (IR) sought feedback from 20 April until 29 May 2026 on plans to amend its Approved Information Sharing Agreement (AISA) to enable faster use of IR income data to more accurately charge income against benefit entitlements.

A summary of the consultation is available alongside proactively released advice.

Background

The Government agreed through Budget 2025 for MSD to use PAYE income information from IR to assess eligibility and automatically calculate payment rates for its clients’ benefits and other income-tested assistance, and to charge clients’ PAYE income forwards from the week they are paid by their employer. These changes are expected to come into force in July 2028.

The first phase of the work has been in effect since July 2025 and is improving the integrity of MSD payments by increasing the manual checks MSD carries out each year. From July 2028, the second phase will introduce an automated process that uses and applies PAYE income information closer to real-time. 

The aims of these changes are to more accurately pay MSD clients what they are entitled to receive, and in the second phase reduce the administrative burden on clients to declare their PAYE income to MSD, and to create less overpayment debt for clients.
In order for these intended outcomes to happen, the AISA between IR and MSD needed to be amended. The amendment waived the requirement for MSD to provide 10 working days’ notice for a client to dispute the accuracy of their personal information, when an adverse action (such as a client’s benefit being reduced or stopped) is taken, based on shared information.

What’s changing

Removing the requirement means MSD can charge clients’ PAYE income as close as possible to when it is received, which will avoid overpayments of benefits being made and reduce the likelihood of client debt. If MSD was not able to use clients’ PAYE income information in a timely way when it is received from IR, then the second phase of changes would result in overpayment debt being established for MSD’s clients.

MSD will introduce safeguards to ensure accurate information matching, prompt notifications, and the ability for MSD clients to challenge the information shared or the decisions made using that information.

There were also existing inefficiencies with how child support income was charged against Income-Related Rent, which can cause hardship for clients. MSD  resolved this issue by amending the AISA to waive the notice period for child support income in relation to the relevant subsidies.

It had also been proposed that the requirement be removed to enable the Government to make decisions in the future to improve the responsiveness of subsidies to income changes. Subsequently this is now limited to the relevant subsidies. You can find further information on these changes in proactively released advice.

The first of these two changes  comes into force on 8 October 2026 to support the first phase and to resolve the child support income issue, with the remaining change following in July 2028.