Overpayments of Benefits
If you do not report changes to your circumstances while claiming benefits to the Department for Work and Pensions (DWP), or in some cases your local authority, you may end up with an overpaid benefit.
Benefit overpayments are usually a priority debt because the DWP can take recovery actions that reduces your current and future benefit income. In addition, overpayment of council tax reduction is treated as council tax arrears which have broader and harsher recovery methods.
Deductions from Benefit
Most overpayments of benefits can be taken directly from your current benefit claims. If you have an overpayment debt with no arrangement in place, it is likely that this will start when you make any new claims.
UC Deduction rates
There are 2 exceptions - Last Resort Deductions (arrears of housing and fuel) and ongoing monthly costs for utilities (gas, electricity and water) where there are also arrears being taken for them.
Fraud deduction rates
If a claimant has intentionally provided DWP with incorrect information (fraud) overpayments are repaid by deducting up to 30% of the Universal Credit standard allowance.
Deductions from Wages
County Court Enforcement
Housing Benefit Overpayment
Tax Credits Overpayment
If you still get tax credits
HMRC will automatically reduce your future tax credit payments until you have paid back the money you owe.
The amount they will reduce your tax credit payments by usually depends on how much you currently get and your household income.
£20,000 or less and you get maximum tax credits - 10%
£20,000 or less and you get less than the maximum tax credits - 25%
More than £20,000 - 50%
If you only get the family element of Child Tax Credit, your payments will be reduced by 100% whatever your income is.
If you now claim Universal Credit
If you claimed tax credits as a couple
The debt will be split in half between you. Each of you will receive a letter with details of your half of the debt. You must each pay your half.
Overpayments when a claimant dies
Deductions from Universal Credit
If the deductions from your UC claim are causing exceptional hardship, you can request that they be lowered.
You can request lower overpayment deductions by contacting the debt management unit, make sure that you have your latest budget to hand before calling: 0800 916 0647.
Tax Credit Overpayments
If the above recovery rates are too high and causing you hardship, you can ask for them to be lowered on grounds of exceptional hardship, you can do this through your government gateway account (quickest), or call the Tax Credit helpline: 0345 300 3900.