The IVA Annual Review Explained

Once a year, every IVA goes through an annual review. It's a routine check-in where your insolvency practitioner (IP) looks again at your income and outgoings to make sure your monthly payment still fairly reflects what you can afford. There's nothing to fear here — it's a normal, expected part of how an IVA works, and it exists to keep the arrangement fair to both you and your creditors.

In plain terms: if your circumstances have improved, your payment might rise a little; if things have got tighter, it might come down. The review simply keeps everything in step with your real life.

What the review is for

An IVA is built around one idea: that you pay what you can genuinely afford towards your debts over five or six years. But incomes and outgoings change — wages rise, children grow up, energy bills move. The annual review keeps your monthly payment matched to your current situation, so you're never paying more than is fair, or less than you can reasonably manage.

What information you'll need to provide

Your IP will ask you to share up-to-date evidence of your finances. Getting this ready in good time keeps the review quick and painless.

Typical documents

• Recent payslips, or accounts if you're self-employed.
• Bank statements covering the last few months.
• Details of any change to your rent, mortgage or key bills.
• Information about any benefits you receive.

If you run your own business, your income can vary from month to month, so it helps to keep clear records throughout the year.

How your payment might change

If you're earning more

Many IVAs include a rule about pay rises — commonly, you keep a portion of any increase and pay a share of the rest into the arrangement. This is worked out during the review. It's meant to be fair: you still feel the benefit of a rise, while creditors receive a reasonable contribution.

If money is tighter

If your income has dropped or your essential costs have climbed, the review is a natural moment to lower your payment. And if you're struggling before the review comes around, you don't have to wait — read what to do when you can't afford your IVA payments, as reduced payments and payment breaks can be arranged at any time.

Windfalls, bonuses and lump sums

The review is also when your IP checks whether you've received any money that should be paid into the IVA. Bonuses, overtime, inheritance, a compensation payout or similar can count as a windfall, and you're expected to declare these. Being upfront matters — declaring them at the right time keeps your arrangement in good standing.

What if my circumstances have changed a lot?

Sometimes a review reveals a big shift — a new job, a house move, a change in your family. If the change is significant, your IP may propose a variation, putting revised terms to your creditors for approval. This is a routine mechanism for keeping an IVA workable. If you own your home, the review process also feeds into the later stages of your arrangement, including the equity release step in year five, so it's worth understanding how those pieces connect.

What happens if you miss the review or don't respond?

The annual review isn't optional, and it's in your interest to take part. If you don't reply to your IP's requests for information, they can't properly assess your payment, and repeatedly ignoring the review could ultimately put your arrangement at risk. The far easier path is to respond promptly with the documents asked for. If you're finding it hard to gather everything, or you're worried about what the review might show, say so — your IP would much rather hear from you than chase you.

Staying on track through the year

• Keep payslips and statements filed so they're easy to hand over.
• Tell your IP about major changes when they happen, not just at review time.
• Set aside a little time before the review to update your budget honestly.
• Remember your IVA still affects your credit rating throughout — the review doesn't change that, but completing your IVA is a step towards recovery.

What happens if you get a pay rise?

This is the question people ask most, and the answer is less alarming than most people fear. A pay rise doesn't simply get swallowed by your IVA. Most arrangements follow the standard terms used across the industry, under which you keep a share of any increase in your disposable income and the rest goes into the arrangement.

The usual mechanic is this: a modest rise is often absorbed entirely by the corresponding rise in your living costs, so nothing changes. Beyond a small buffer, the increase is typically split, so you keep part of it and your creditors receive part of it. The exact wording is set out in your IVA proposal, so it's worth reading that section rather than relying on general guidance.

The important point is that you're never left worse off by earning more. If your income rises and your review payment rises, you still end up with more in your pocket than before.

Overtime, bonuses and commission

Regular, predictable overtime is usually built into your monthly payment from the outset, because it forms part of your normal income. Irregular extra earnings are handled differently.

• Occasional overtime is commonly dealt with under a threshold rule — if your take-home pay in a given month exceeds your agreed figure by more than a set percentage, you pay over a share of the excess.
• Annual bonuses are usually declared when received and treated in a similar way.
• Commission that varies month to month is often averaged over a longer period so your payment doesn't lurch about.

If a large one-off sum arrives that isn't earnings at all — an inheritance, a compensation payment, a lottery win — different rules apply entirely. See our guide to IVAs, windfalls and inheritance.

If you're self-employed

Self-employed income is rarely steady, so annual reviews matter more. Your insolvency practitioner will usually want to see recent business accounts or bank statements rather than payslips, and will look at the trend across the year rather than a single month.

Because trading income can swing, it's worth keeping simple records throughout the year rather than assembling everything the week the review letter arrives. Our guide to debt help for the self-employed covers how trading is handled inside an IVA more generally.

Can the review reduce my payment?

Yes. The review works in both directions. If your income has fallen, or an essential cost like rent, energy or childcare has risen, your payment can be reduced to reflect that.

Don't wait for the annual review if something significant has already happened. A sudden drop in income is better raised straight away, because options such as a payment break or a reduced payment period need to be agreed before arrears build up. Our guide on what to do if you can't pay your IVA sets out what's available.

What to have ready

Having your paperwork together makes the review quick and painless. Most practitioners will ask for some combination of:

• Your last three months' payslips, or recent accounts if you're self-employed.
• Recent bank statements.
• Evidence of any benefits or tax credits you receive.
• Up-to-date figures for rent or mortgage, council tax, energy, water and insurance.
• Details of any change in your household — a new job, a partner moving in, a child starting or leaving childcare.

Living costs are assessed against recognised guidelines rather than plucked from the air, so if a particular cost in your household is higher than average, say so and explain why.

What if you miss the review?

Ignoring review correspondence is one of the more common ways an otherwise healthy IVA runs into trouble. Your practitioner has a duty to report to creditors, and repeated non-response can lead to a breach notice and, ultimately, to the arrangement failing. Our guide on what happens if your IVA fails explains the consequences.

If you've missed a letter or two, the fix is simply to get in touch. Practitioners deal with this constantly and would far rather hear from you late than not at all.

Common questions

How often does an IVA review happen?

Once a year, usually around the anniversary of your arrangement starting. Your insolvency practitioner may also review your situation at other times if your circumstances change significantly.

Does my IVA payment always go up at the annual review?

No. Payments can go up, down or stay the same. The review reassesses your income against your essential outgoings, so if costs have risen or income has fallen your payment can be reduced.

Do I have to declare a pay rise during my IVA?

Yes. You're required to report changes in your income. Most IVAs let you keep a share of any increase, with the remainder going to creditors, so declaring a rise doesn't leave you worse off than before.

What happens to overtime and bonuses in an IVA?

Regular overtime is usually built into your agreed payment. Occasional overtime and bonuses are typically handled under a threshold rule, where you pay over a share of anything above an agreed percentage of your normal take-home pay.

How long does an IVA annual review take?

Once you've sent your information, the review itself is usually completed within a few weeks. Providing everything at once is the single biggest thing that speeds it up.

What happens if I ignore my IVA annual review?

Repeated failure to respond can lead to a breach notice and eventually to the arrangement failing, which would bring the original debts back with interest and charges. Contact your practitioner as soon as you can if you've fallen behind with correspondence.

How IVA Advice Online can help

If you're not yet in an IVA and want to understand what the yearly reviews would involve, or you're weighing up whether an IVA is the right path, we're here to help. To talk through your options, get in touch. There's no charge for an initial assessment of your options, and we'll only ever flag a fee if a solution you choose carries one.