The Common Financial Tool (standard financial statement)

The Common Financial Tool (CFT) is the set method used in Scotland to work out how much you can afford to pay towards your debts in a formal debt solution. In law, the tool is the Common Financial Statement, although many people search for it as the standard financial statement, which is a similar UK budget format. Money advisers and trustees must use it for the Debt Arrangement Scheme, protected trust deeds and bankruptcy, so the same rules decide your payment whichever option you look at.

This page explains how the tool works in general. For how it applies to a trust deed payment, see how your trust deed payment is worked out.

Standard financial statement or Common Financial Statement?

Three similar names get mixed up.

• The Common Financial Tool is the legal term for the method. The Bankruptcy and Debt Advice (Scotland) Act 2014 brought in one tool for assessing contributions in all of Scotland’s statutory debt solutions, and the Bankruptcy (Scotland) Act 2016 kept it.
• The Common Financial Statement (CFS) is the budget format the tool uses. Regulation 15 of the Bankruptcy (Scotland) Regulations 2016 says the common financial tool “is the Common Financial Statement”. The CFS was first published in 2002 by the credit and advice sectors. The Accountant in Bankruptcy (AiB), the Scottish Government agency that deals with insolvency, has run it since April 2024, supported by UK Finance.
• The Standard Financial Statement (SFS) is a separate UK-wide budget format run by the Money and Pensions Service. AiB says the SFS has replaced the CFS for organisations in England and Wales. The SFS uses “spending guidelines” where the CFS uses “trigger figures”.

Which debt solutions use the Common Financial Tool?

AiB’s guidance says money advisers must use the CFT when they assess what someone can pay, and trustees must use it to set contributions in protected trust deeds and bankruptcy.

The legal requirement covers these statutory solutions only, not informal arrangements such as a debt management plan.

How does the tool work out what you can afford?

The law says your contribution is your surplus income above the lower of two figures for each type of spending: what you actually spend, or the trigger figure for that category. In practice, an assessment goes through these stages.

1. Your household. The CFT is designed to capture the whole household’s income and spending, including a partner’s. If a partner will not share their details, the adviser records why and makes a reasonable assumption, for example that you pay half of the housing and utility costs.
2. Your income. This includes wages (normally three months of payslips, or an average over up to 12 months if your pay varies), drawings from self-employment worked out on a separate business budget, pensions being paid to you, maintenance paid to you, rent from a lodger, and benefits.
3. Your spending, in five categories: essential expenditure, phone, travel, housekeeping and other expenditure.
4. The comparison. Your actual spending in each category, apart from essential expenditure, is checked against the trigger figure.
5. A contingency. Up to 10% of your surplus, capped at £20 a month, can be set aside for unexpected costs. AiB’s own example: a surplus of £100 becomes £90.
6. Your share. Where the full household income is known, your surplus is your share of the household surplus, in proportion to your share of the household income. If you bring in 60% of the household income, 60% of the household surplus is used. This stops a higher-earning partner inflating what you are asked to pay.

What are trigger figures?

Trigger figures are benchmark amounts for reasonable spending on phone, travel, housekeeping and other costs. There is no trigger figure for essential expenditure, because costs such as rent vary too much between households.

• They are calculated by an independent third party, not AiB, using the Office for National Statistics Living Costs and Food Survey. They are based on spending in the lowest-income fifth of households.
• They take account of who lives with you, with allowances for dependants and other adults.
• They are reviewed each year and published in April.
• They are not the starting point. AiB’s guidance says your actual spending should be recorded first, and only then compared with the trigger figures.

Spending within the trigger figures does not normally need any further explanation. Spending above a trigger figure is not automatically refused. You need to explain why it is needed and provide evidence, and AiB, the trustee or the court decides whether it is reasonable. The law also says the spending allowed must be enough for your own living costs and any child support or aliment (financial support for a child or former partner) you have to pay.

What evidence is needed for essential spending?

Essential expenditure covers the main housing costs, such as rent or mortgage, council tax, insurance and utility bills, plus items such as childcare, child maintenance you pay and hire purchase. It is taken at your actual cost, so it has to be backed by bills or bank statements. A few points from AiB’s guidance:

• For gas and electricity, AiB only asks to see evidence or estimates if your spending is above a monthly amount it links to Ofgem’s energy price cap, which it updates when the cap changes.
• Spreading council tax over 12 months rather than 10 gives a more accurate monthly figure. You can ask your council, although it is up to them.
• Hire purchase payments can count as essential where the item is essential, such as a car that is your only way of getting to work.
• Money a relative gives you to help with your debts has to be confirmed in writing.
• If your health or other circumstances make evidence hard to get, the adviser can explain this instead.

How are benefits treated?

If all your income comes from social security benefits and tax credits, no contribution is due. In a protected trust deed or bankruptcy, no contribution can be taken from Universal Credit, tax credits or other benefits, including Scottish benefits such as the Scottish Child Payment.

Your benefits are still counted as household income, because they help pay your living costs. But the contribution worked out must not be more than your earned income, which keeps benefits out of the payment. AiB’s list of payments a contribution cannot come from includes Universal Credit, Child Benefit, Personal Independence Payment, Adult Disability Payment, Carer’s Allowance and Pension Credit. Disability benefits count as income, but any extra costs linked to your disability or care needs can be allowed as spending.

DAS works slightly differently: if you would prefer to repay through a debt payment programme, you can choose to make a voluntary contribution from benefits. There is more on benefits and trust deeds in trust deeds and benefits.

Can you fill in the Common Financial Tool yourself?

No. The CFT is an online system run by AiB, and money advisers and trustees log in to use it. You still take part: the adviser should go through your income and spending with you, and you can ask to see how each figure was reached.

It helps to have these ready:

• your last three months of payslips, or recent benefit award letters
• recent bank statements
• your rent or mortgage statement, council tax bill and energy bills
• details of anyone else in your household who contributes
• if you are self-employed, your business income and costs (Business Debtline can help you prepare a business budget)

Because the same tool is used for DAS, trust deeds and bankruptcy, one accurate budget lets an adviser compare what each option could mean for you. Free services can complete the CFT with you at no cost: see free debt advice in Scotland.

Official sources

• The Bankruptcy (Scotland) Regulations 2016, regulation 15: common financial tool
• AiB Notes for Guidance: Common Financial Tool
• AiB: the Common Financial Tool, Common Financial Statement and trigger figures
• Money and Pensions Service: what is the Standard Financial Statement?
• mygov.scot: what is the Debt Arrangement Scheme?