What is a benefits overpayment?
A benefits overpayment is when you are paid money you are not entitled to. This may be a benefit you do not quality for. Or you might get more for a benefit than you are entitled to. You might realise you have been overpaid if:
- You notice the amount you received is wrong
- You gave incorrect information about your finances or living situation
- You don’t report a change in your circ*mstances
- The benefits office tells you about an overpayment
How do overpayments occur?
Overpayments can happen for three main reasons:
Changes in circ*mstances
Overpayments can happen when your circ*mstances change. Perhaps you start a new job or are made redundant, your income changes or your partner or children move out of your home. All of these can affect how much you’re entitled to.
Here’s an example of a woman who was claiming JSA, got a job and was overpaid as a result.
- Two weeks of JSA covering 7 April to 20 April comes to £148.70. This is her normal payment.
- She got a job on 13 April but forgot to tell the DWP until 27 April.
- She should have only had JSA from 7 April to 12 April, which is £63.73.
- This means she has to repay £84.97.
Errors by the benefits agency
The benefits office can make mistakes when it calculates your benefits. These errors lead to overpayments.
Official statistics show that Universal Credit errors led to 0.7% of payments being overpaid in 2023. This was a total of £380m. The rate for Housing Benefit was 0.5% (£70m). For Disability Living Allowance it was 0.2% (£10m).
Overpayments of some benefits don’t need to be paid back if it wasn’t your fault. These include:
- Income Support
- Jobseeker’s Allowance (JSA) but not new-style JSA
- Employment and Support Allowance (ESA) but not new-style ESA
- Personal Independence Payment
- Disability Living Allowance
With newer benefits, you may have to repay the money even if the overpayment was not your fault.
Mistakes on benefits claims
Benefits claimants make mistakes. You may give the wrong information or not enough when you make your claim. You might fail to tell the DWP when your job or home life changes. Not renewing your tax credits on time can also lead to a benefits overpayment.
Overpayments of Universal Credit due to an error made by the person claiming came to 0.8% in the 2023. This amounted to £410m. The rate for Housing Benefit was 2% (£300m). For Disability Living Allowance it was 0.2% (£10m).
What happens when benefits are overpaid?
For most overpayments, you will need to pay the money back. This includes Universal Credit, new-style Jobseeker’s Allowance and new-style Employment and Support Allowance.
Repaying can cause financial hardship. And if you keep being overpaid or make fraudulent claims, this could affect your eligibility for future benefits.
Failure to repay could affect your credit rating if the government applies for a county court judgment. This will lead to more costs and affect your credit score for six years.
You could also be fined £50 if the overpayment was your fault or you didn’t try to correct a mistake. This applies only to benefits, not tax credits.
In some cases, you could be prosecuted for benefit fraud if you do not report overpayments.
Can benefits overpayments be written off?
The DWP can agree to write off the overpayment. This is unusual. It happens if repaying the money would cause serious financial hardship or welfare issues for you or your family.
The DWP will look into the circ*mstances of the overpayment. If it was due to an administrative error rather than you supplying the wrong information, this is likely to help you.
How to prevent benefits overpayment
It’s best to prevent benefits overpayments. You won’t have to pay back money or risk having your benefits reduced.
Regularly update personal information
Make sure you provide accurate information. Answer questions honestly when making a claim. Tell the benefits office as soon as you can if anything changes in your life, such as your job or who you live with.
Understanding your benefits
Understanding what you are entitled to will help avoid overpayments. Read the benefits leaflets carefully to find out:
- Who is eligible
- What changes to your circ*mstances you must report to the benefits office
It’s worth learning about the benefit cap too.
How to deal with benefits overpayments
If you think you’ve been overpaid benefits or tax credits, report it as soon as possible. The longer you leave it, the more money you may have to pay back.
Contacting the DWP
Reporting a Universal Credit overpayment | Sign into your Universal Credit account. Alternatively, call the DWP helpline (0800 328 5644, Monday to Friday, 8am to 6pm). |
Reporting a tax credits overpayment | Call the HM Revenue and Customs (HMRC) helpline (0345 300 3900, Monday to Friday, 8am to 6pm). |
Reporting an overpayment of Housing Benefit or Council Tax | Report to your local council. |
Reporting an overpayment of other benefits | Contact the office paying your benefit as soon as possible. Let them know that you think you’ve been overpaid. |
Repayment options
There are several ways the DWP can reclaim its money:
- Deduct money from your benefits payments
- Take money directly out of your wages
- Via a court order for debt recovery
Or you can pay the money yourself using a debit card or via Direct Debit, cheque or cash.
In practice, if you are still receiving benefits, any overpayment is usually repaid by reducing your benefits payments.
Repayments are worked out depending on which benefit has been overpaid:
Benefit | Repayment amount |
Housing Benefit | £13.65 a week |
Income-related Employment and Support Allowance (ESA) | £13.65a week |
Income-based Jobseeker’s Allowance (JSA) | £13.65a week |
Income Support | £13.65a week |
Pension Credit | £13.65a week |
Tax credits | 10% to 100% of your award |
Universal Credit | Maximum 25% of your standard allowance |
These amounts can be higher if you committed fraud.
If you need help managing your repayments, contact DWP Debt Management (0800 916 0647, Monday to Friday, 8am to 7:30pm). They can explain your options and you can discuss what you can afford to pay.
Advice and support
The following charities can help if you have questions about overpayments:
You can challenge an overpayment and ask for your case to be looked at again. You can appeal if you don’t agree you’ve been overpaid. You can also appeal if you don’t think you should have been charged a penalty.
Citizens Advice has more information about how and when to appeal. This includes asking for a mandatory reconsideration and applying to HM Courts and Tribunals Service to start an appeal.
FAQs: benefits overpayment
Is benefits overpayment a priority debt?
Benefits overpayments are priority debts. If you have more than one priority debt, they are deducted from your benefits as set out in Schedule 9 of The Social Security (Claims and Payments) Regulations 1987. Housing costs come first, then water, Council Tax and court fines. Benefits overpayments are at the bottom of the list.
MoneyHelper’s bill prioritiser can help you sort out which debts you need to deal with first.
Can the DWP check your bank account without permission?
The DWP can request details of bank account transactions if there are reasonable grounds to suspect someone of fraud. In future, it may be able to inspect the bank account of anyone receiving social security benefits.
What happens if you don’t pay back the overpayment?
If you do not pay back the overpayment or contact the DWP’s Debt Management team, the DWP may:
- Ask your employer to make deductions from your pay
- Pass your case to a debt collector
- Pass your case to the DWP debt enforcement team
If the Debt Management team takes charge of recovering overpayment, you’ll be asked to set up a repayment plan.
If you do not do this, the team will submit a claim against you to the court. You must repay all the money within six months. Otherwise, a county court judgment (CCJ) is taken out. This will add costs to what you owe and affect your credit score for up to six years.
The DWP can also take money directly from your wages.
Benefits overpayment: summary and key takeaways
Benefits overpayments happen. It’s important you try and avoid them or reduce the impact if they occur.
Always be honest when filling in benefits forms. Always update the information if anything changes. Get to know your benefits: understand why you are being paid the money and the eligibility criteria. And if you suspect you’re being overpaid, report it straight away.
But also remember that there is help out there if you find yourself with benefits overpayments. If you’re struggling to repay, speak to your benefits provider. And if you don’t agree you’ve been overpaid, you can appeal.
