Repaying benefit debts and overpayments

If you’ve been paying off a benefit debt, perhaps as a result of an overpayment, and your repayments were temporarily stopped during the coronavirus pandemic, these will start again at some point.

In England and Wales, payment collections were suspended on 4 April 2020 for three months. Payments restarted in July 2020.

In Scotland, you should have had to start paying back your benefit overpayment from 1 February 2021. Find out more on the mygov.scot website

In Northern Ireland, payment collections were suspended for three months on 13 May 2020. Payments should have restarted. Find out more on the nidirect website

The Department for Work and Pensions (DWP) will contact you when your payments are due to restart.

If the repayments were deducted from your benefits, you don’t need to do anything. They will automatically restart.

If you made the repayments through online banking, Direct Debit or standing order, you’ll need to set them up again.

If you think you’ll struggle to afford the repayments when they start again, it’s important to act now.

If you think you’ve been overpaid benefits or tax credits, it’s important to report it as soon as possible. The longer you leave it, the more money you’ll have to pay back.

Report an overpayment of Universal Credit by calling the Universal Credit helpline: 

Telephone: 0800 328 5644

Textphone: 0800 328 1344

(8am to 6pm, Monday to Friday)

Or log into your online account on the GOV.UK website and add a note to your journal.

Tax credits awards are estimates, which are finalised after you’ve renewed your claim each year.

The amount by which your income can change before you have to tell the Tax Credit Office is £2,500. This is called the income disregard.

Find out more about changes affecting your tax credits on the GOV.UK website

Contact the Tax Credit Helpline if you think you’ve been overpaid:

Telephone: 0345 300 3900

Textphone: 0345 300 3900

(8am to 4pm, Monday to Friday)

Or Webchat

(Monday to Saturday, 8am to 8pm, Sunday)

For more contact information, go to the GOV.UK website

Report an overpayment of Housing Benefit or Council Tax Reduction to your local authority.

Contact the office paying your benefit as soon as possible and let them know that you think you’ve been overpaid.

The overpayment might have happened because of:

• a mistake when your benefits or tax credits were worked out
• wrong information, or not enough information, when you made your claim
• a change of circumstances
• not renewing your tax credits on time.

Tax credits overpayments are common. If you’ve moved from tax credits to Universal Credit, you might have had a letter from HMRC telling you that you’ve been overpaid tax credits.

This overpayment will be deducted from your future Universal Credit payments.

Here are your options:

• Do nothing and wait for the repayments to be deducted from your Universal Credit payments.
• If you can’t afford the repayments, notify the DWP Debt Management contact centre. Find out more on the GOV.UK website
• Repay the tax credits overpayment directly – find out more on the GOV.UK website
• Dispute the overpayment if you think it’s wrong.

If the overpayment was your fault you will be asked to pay back an overpayment of Universal Credit, new style Jobseeker’s Allowance or new style Employment and Support Allowance.

If the overpayment wasn’t your fault, for example an administrative error, you’ll usually be asked to pay it back as well.

However, if you think the amount you received is correct you do have the right to argue that you haven’t been overpaid and challenge the decision. See our section below on ‘How to challenge an overpayment decision’.

You shouldn’t have to pay back an overpayment if the Tax Credit Office made the mistake and you did everything you could to make sure your award was correct. In other words:

•  you reported all changes of circumstances on time
• you checked your award notices and reported any errors within one month.

You won’t have to pay back a Housing Benefit overpayment if it wasn’t your fault and you couldn’t have been expected to know that you were being overpaid.

Overpayments of Council Tax Reduction are treated as Council Tax Arrears. The rules for how they need to be repaid vary depending on where you live.

For all other benefits, you’ll have to pay back the overpayment if you gave the wrong, or incomplete, information when you made your claim.

You have the right to argue that you haven’t been overpaid and challenge the decision. See our section below on ‘How to challenge an overpayment decision’.

You’ll get a letter – or a message in your online account – about your overpayment. This will explain how much you were overpaid and for how long.

If you're repaying the amount you owe by taking the money out of current benefits, the way your repayments are worked out is different depending on which benefit has been overpaid:

• For Universal Credit, it can’t be more than 25% of your standard allowance.
• For tax credits, it varies from 10% to 100% of your award. This depends on how much you currently get in tax credits and your household income.
• For Housing Benefit – if it’s paid to you, the repayments are usually £11.10 a week. If it’s paid direct to your landlord, they usually have to pay it all back in one go and you’ll have to agree a repayment plan with your landlord.
• For other benefits, such as Income Support or Pension Credit, the repayments are usually £11.10 a week.

If the overpayment is your fault, or you didn’t try to correct a mistake, you might be charged a penalty of £50 on top of the money you have to pay back. This only applies to benefits, not tax credits.

You can appeal against a decision to charge you a penalty. See below our section below on ‘How to challenge an overpayment decision’.

You can ask for the decision to be looked at again and appeal against it, if:

• you don’t agree that you’ve been overpaid
• you don’t agree with the amount
• you don’t think you should have been charged a penalty.

If the overpayment has happened because you’ve made a new claim for Universal Credit, you can use the Citizens Advice Help to Claim Service if you need help to challenge the decision.

Citizens Advice Help to Claim service

If you’re claiming Universal Credit for the first time, the Citizens Advice Help to Claim service is free and confidential. They can help you:

• check if you’re entitled to Universal Credit
• get your important paperwork and documents together to speed up your application
• fill out your application online.

You might have received an advance payment while you were waiting for your first Universal Credit payment to come through.

Your repayments will probably have started straight away, although they can be delayed up to three months if you’re in financial crisis.

You make the repayments out of your Universal Credit over 12 months. And they can be up to 25% of your Universal Credit basic allowance.

You might have had a Budgeting Advance to help with emergency household costs or to pay towards a funeral.

Your repayments will have started straight away after receiving the advance. They are taken out of your Universal Credit payments.

They are usually spread over 12 months, but this can be extended by an extra three months if needed.

You might have received a Budgeting Loan to help pay for a household appliance or to help with the cost of moving home.

Repayments for Budgeting Loans were paused during the coronavirus crisis, but are now restarting. They’re usually spread over two years and are taken automatically from your benefits. The repayment amount is based on your income and what you can afford.

You might have had a Hardship Payment to help make ends meet if your benefit payments were reduced because of a sanction.

You only have to repay a Hardship Payment if you’re on Universal Credit (not other benefits). They’re repaid out of your future payments and they can be up to 30% of your Universal Credit basic allowance.

You can repay a benefit debt by:

• deductions from your benefit payments
• making payments through online banking, Direct Debit or standing order.

If none of these are possible, the debt can be recovered from your wages or passed onto a debt collection agency.

If you want to make a repayment, contact the DWP Debt Management contact centre.

DWP Debt Management contact centre

Call them free on:

Telephone: 0800 916 0647

Textphone: 0800 916 0651

(9am to 4pm, Monday to Friday)

If you’re struggling – or you think you’re going to struggle – to repay a benefit or tax credit debt, it’s important to act quickly.

If you don’t have enough to live on because of the repayments you’re being asked to make, you can ask for them to be reduced.

If you’re repaying a Universal Credit advance payment, call the Universal Credit Helpline or log into your online account and add a note to your journal asking for your repayments to be reduced.

If you need help with your claim, call the Universal Credit helpline free on:

Telephone: 0800 328 5644
Textphone: 0800 328 1344

8am to 6pm, Monday to Friday (closed on bank and public holidays). Calls are free.

The helpline is currently very busy because of the coronavirus crisis. So you might prefer to use your online account if you can. Sign in on the GOV.UK website

DWP Debt Management contact centre

Call them free on:

Telephone: 0800 916 0647

Textphone: 0800 916 0651

9am to 4pm, Monday to Friday.

Benefit debt is classed as a priority debt. This means the consequences of not paying it off are more serious.

Other priority debts include rent arrears, overdue energy bills and unpaid Council Tax.

If you’ve got more than one priority debt, it’s important to get advice as soon as possible.

Get help on which debts to deal with first from the Citizens Advice website