Being told you have been overpaid benefits and must repay money can be frightening, especially when the sums are large and the overpayment was not your fault. But you have rights, and there are things you can do. This guide explains how benefit overpayments happen, when they can be recovered, and what to do if you receive a demand to repay.
How overpayments happen
Benefit overpayments can happen for many reasons: a change in your circumstances that was not reported or not acted on, a mistake by you in what you reported, an error by the DWP or council, or a delay in updating your claim. Sometimes they build up over months before anyone notices, which is why the amounts can be large. Understanding how an overpayment arose is the first step in working out what to do about it.
When overpayments can be recovered
The rules on whether an overpayment must be repaid depend on the benefit. For Universal Credit and tax credits, overpayments are generally recoverable whatever the cause, including where the mistake was the DWP's. For some other benefits, such as certain Housing Benefit overpayments, an overpayment caused purely by official error may not be recoverable if you could not reasonably have known you were being overpaid. Because the rules differ, it is worth getting advice on your particular overpayment.
Check the overpayment is right
When you receive an overpayment decision, do not assume it is correct. Check the figures and the dates, and make sure the amount and the reason make sense against your records. Overpayment calculations are sometimes wrong, or cover the wrong period, so it is worth checking carefully. If something does not look right, you can challenge the decision, just as you would any other benefit decision, through a Mandatory Reconsideration.
Challenging an overpayment
If you think the overpayment decision is wrong, for example because you did report a change, or the amount is incorrect, or it should not be recoverable, you can ask for a Mandatory Reconsideration and then appeal if necessary. It is worth challenging where you have grounds, as the decision is not always right. Get advice to work out whether you have a good case and to help you put it forward clearly.
How overpayments are recovered
If an overpayment is recoverable and correct, it is usually recovered by taking deductions from your ongoing benefits, or from your wages if you are working, or through a debt collection process if you are no longer on benefits. There are limits on how much can be taken from your benefits, designed to leave you enough to live on. If the deductions are leaving you unable to manage, you can ask for them to be reduced.
If repaying causes hardship
If repaying an overpayment, or the rate at which it is being recovered, is causing you real hardship, you can ask for the repayments to be reduced to a more affordable amount, explaining your financial situation. In some cases, you can also ask the DWP to consider waiving recovery altogether, particularly where the overpayment was their error and recovering it would cause hardship. These requests are not always granted, but it is worth asking and getting advice.
Do not ignore it
Whatever you do, do not ignore an overpayment demand, as that can lead to deductions or recovery action being taken without your input. Engage with it: check it, challenge it if it is wrong, and arrange affordable repayments if it is right. Getting advice early gives you the best chance of a good outcome, whether that is reducing the amount, having it written off, or simply making the repayments manageable.
Reporting changes prevents overpayments
The best way to avoid an overpayment in the first place is to report changes in your circumstances promptly and keep your claim up to date. Many overpayments arise simply because a change was not reported, or was reported late, allowing the wrong amount to be paid for a period. Whenever something changes that could affect your benefits, such as your income, work, household or savings, tell the relevant office straight away, and keep a note that you did.
Overpayments and fraud are different
It is important to understand that most overpayments are not fraud. They usually result from genuine mistakes or delays, by you or by the office, rather than any attempt to claim wrongly. Fraud involves deliberately giving false information or failing to report something on purpose, which is treated very differently. If you have simply made an honest mistake, you can say so, and you should not be treated as though you have committed fraud.
Getting your benefits right going forward
After dealing with an overpayment, it is worth making sure your claim is now correct, so the problem does not continue or recur. Check that the right amount is being paid and that all your circumstances are properly recorded. If an overpayment arose from a misunderstanding about what to report, an adviser can help you understand your responsibilities, so you can keep your claim accurate and avoid further overpayments in the future.
Asking for a write-off in hardship
Where an overpayment was not your fault and recovering it would cause real hardship, it is worth asking the DWP to consider not recovering it, sometimes called a waiver. Waivers are not common and are at the DWP's discretion, but they can be granted in the right circumstances, particularly where official error and serious hardship combine. An adviser can help you put together a request that sets out your situation clearly and gives you the best chance.
Get advice before agreeing to repay
Before agreeing to repay a large overpayment, or to a repayment rate, it is worth getting advice, because you may have grounds to challenge the overpayment, reduce the amount, or arrange more affordable repayments. Simply accepting a demand without checking can mean repaying money you do not owe, or repaying at a rate you cannot afford. A short conversation with an adviser can make a real difference to the outcome.
In short
Benefit overpayments happen for many reasons, and for Universal Credit they are usually recoverable whatever the cause. Check any overpayment decision carefully, challenge it through a Mandatory Reconsideration if it is wrong, and ask for affordable repayments or, in some cases, a waiver if recovery causes hardship. Do not ignore a demand, and get advice early.
You are not powerless
An overpayment demand can feel overwhelming and frightening when it first arrives, but the important thing to hold onto is that you are not powerless in the face of it. You can check whether it is right, challenge it if it is wrong, arrange repayments you can afford, and in some cases ask for it to be reduced or waived. The key is to engage with it and to get advice early rather than ignoring it or simply agreeing. With the right help and a calm, practical approach, even a large overpayment can usually be dealt with in a way that you can manage without it taking over your life.
Where to get help
Citizens Advice and welfare rights services can help you deal with an overpayment. See our guides to the Mandatory Reconsideration and, for carers specifically, Carer's Allowance overpayments.