Repaying benefit debts

If you’ve been overpaid benefits or tax credits, you will have to repay this money. In this guide you will find out why you might have been overpaid, how you can make repayments and what to do if you can’t afford to make your repayments.

Coronavirus and repaying benefits

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 crisis, these will start again at some point.

When will the repayments start again?

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

In Scotland, you won’t have to pay back your benefit overpayment until 1 October 2020.

Find out more on the Scottish Government 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.

How will I know payments are restarting?

DWP will contact you when your payments are due to restart.

Do you need to do anything?

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 will struggle to afford the repayments when they start again, it’s important to act now.

If you think you’ve been overpaid

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.

Universal Credit

Report an overpayment of Universal Credit by calling the Universal Credit helpline or logging into your online account and adding a note to your journal.

Telephone: 0800 328 5644

Textphone: 0800 328 1344

8am - 6pm, Monday to Friday

Tax credits

Call the Tax Credit Helpline if you think you’ve been overpaid.

Telephone: 0345 300 3900

Textphone: 0345 300 3900

8am - 4pm, Monday to Friday

Webchat

Monday to Saturday, 8am to 10pm, Sunday, 9am to 10pm

Housing Benefit or Council Tax Reduction

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

Other benefits

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

Why you might have 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

Overpayments of tax credits when you start claiming Universal Credit

Tax credits overpayments are common. If you’ve moved from tax credits to Universal Credit you might have received a letter from HM Revenue & Customs telling you that you’ve been overpaid tax credits.

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

Your options are:

  • Do nothing and wait for the repayments to be deducted from your Universal Credit payments.
  • Contact the Department for Work and Pensions (DWP) Debt Management if you can’t afford the repayments.
  • Repay the tax credits overpayment directly – see the GOV.UK website.
  • Dispute the overpayment if you think it’s wrong.
Find out how to challenge a tax credits decision on the Citizens Advice website.

Will you have to pay back an overpayment?

Universal Credit, new-style Jobseeker’s Allowance or new-style Employment and Support Allowance

Even if the overpayment was not your fault, you will always have to pay back an overpayment of Universal Credit, new-style Jobseeker’s Allowance or new-style Employment and Support Allowance.

However, you do have the right to argue that you haven’t been overpaid and challenge the decision. See below – ‘How to challenge an overpayment decision’

Tax credits

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
More about tax credits overpayments on the Citizen’s Advice website.

Housing Benefit

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.

More about Housing Benefit overpayments on the Citizen’s Advice website.

Council Tax Reduction

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.

More about Council Tax Reduction overpayments on the Turn2Us website.

Other benefits

For all other benefits, you will have to pay back the overpayment if you gave the wrong information, 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 below – ‘How to challenge an overpayment decision’

How much are the repayments?

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

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 30% of your standard allowance.
  • For tax credits, it varies from 10% to 100% of your award, depending 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 per 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 per week.

Penalties

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.

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

How to challenge an overpayment decision

If either:

  • 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

you can ask for the decision to be looked at again and appeal against it.

Find out how to challenge a benefits decision on the Citizens Advice website.
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.

What other payments have to be paid back?

Universal Credit advance payments

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 30% of your Universal Credit basic allowance.

Universal Credit Budgeting Advances

You might have received 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 6 months if needed.

Budgeting Loans from the Social Fund

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 are usually spread over 2 years and are taken automatically from your benefits. The repayment amount is based on your income and what you can afford.

Hardship Payments if you’re on Universal Credit

You might have received 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 are repaid out of your future payments and they can be up to 30% of your Universal Credit basic allowance.

Repaying a benefit debt

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 Department for Work and Pensions (DWP) Debt Management contact centre.

Can’t afford the repayments?

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 this is your only debt

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’re repaying any other benefit or tax credit debt, contact the Department for Work and Pensions (DWP) Debt Management contact centre.

Call the DWP Debt Management contact centre free on:

Telephone: 0800 916 0647

Textphone: 0800 916 0651

8am - 7pm, Monday to Friday, 9am – 4pm Saturday.

If you have other debts

Benefit debt is classed as a ‘priority debt’. This means the consequences of not paying it off are more serious. Other priority debts are things like rent arrears, overdue energy bills and unpaid Council Tax.

If you’ve got more than one priority debt you should get advice as soon as possible.

Get help on which debts to deal with first from the Citizens Advice website.
Find out more on how to prioritise your debts.
If you’re struggling with debts, find free, impartial help near you with our debt advice locatoropens in new window.

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