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Benefit overpayments under the Universal Credit System (Scotland)
This fact sheet covers Scotland. You will need different advice if you live in England & Wales.
This fact sheet explains what an overpayment under the Universal Credit system is and the possible ways to deal with an overpayment.
Use this fact sheet to:
- understand why you may have a benefit overpayment;
- know how you may be able to appeal an incorrect benefit overpayment decision;
- see what options you have to deal with a benefit overpayment; and
- know how the overpayment may be recovered.
What is an overpayment under the Universal Credit system?
A benefit overpayment is money owed as a result of being paid too much benefit. Universal Credit overpayments will be owed to and collected by the Department for Work and Pensions (DWP).
Overpayments may occur for a variety of reasons, for example:
- the benefits office made a mistake;
- the information you gave may have been incorrect; or
- you didn’t inform the benefit office of a change in circumstance which would have meant your benefit would reduce or stop.
An overpayment under the Universal Credit system will be an overpayment of Universal Credit, New Style Jobseekers’ Allowance (New Style JSA) or New Style Employment and Support Allowance (New Style ESA).
If you received a Universal Credit Advance but no longer receive Universal Credit, any money you owe will also be recovered as though it is an overpayment of Universal Credit.
The DWP will contact you to inform you of an overpayment. If you don’t think the overpayment decision is correct you can challenge it. If the money is owed you can usually try to negotiate repayments at an affordable amount.
If you have been overpaid, the DWP will be able to recover the overpayment regardless of the cause of the overpayment. So, even if the DWP made a mistake in how much they paid you, they can still look to recover the money.
However, if you think you were entitled to the amount received, you can appeal the overpayment decision. See the Mandatory reconsideration section.
Knowing whether an overpayment decision is correct can be difficult to work out. If you do not have enough information to be sure that you were overpaid, you can ask for a written statement of the reasons for the overpayment. You must do this within one month of the overpayment decision. If you are still unsure if the money is owed, you should contact a benefit adviser to help you.
You can appeal against a decision that you have been overpaid, or the amount of the overpayment, by asking for a mandatory reconsideration. The request should be made within one month of being given the decision. This is called an ‘any grounds’ revision where the DWP will look again at your circumstances when the decision was made.
If you have requested a statement of reasons for the overpayment, the period of time you have to apply for a mandatory reconsideration will be extended to:
- one month and 14 days of being given the decision, if the statement is provided within one month: or
- 14 days of receiving the statement if it has not been provided within one month period.
You can make a mandatory reconsideration request through your online journal. Explain in your journal why you think the decision is wrong and provide any new information that will support your case. You should also phone the Universal Credit helpline on 0800 328 5644 to tell them you have done this.
If your Universal Credit claim has closed and you no longer have a journal, you’ll need to call the Universal Credit helpline on 0800 328 5644, or you can send a mandatory reconsideration request form from the GOV.UK website to the address on the decision letter. (This can also be done for late applications, see the following section about Late mandatory reconsideration requests).
After making a mandatory reconsideration request, you will receive a mandatory reconsideration notice which will tell you the outcome. If you believe the decision the DWP has made is incorrect, you can appeal to the First-tier Tribunal. See the First-tier Tribunal section below.
The DWP will usually continue trying to collect the debt during the mandatory reconsideration process.
Late mandatory reconsideration requests
If you are outside the one month application period, you may still be able to apply for a mandatory reconsideration within 13 months of being notified about the decision. You need to show that there were special circumstances which meant you couldn’t apply in time.
If a late request within 13 months is refused, it will still count as a mandatory reconsideration request, so you can still appeal to the First-Tier tribunal (see the First-Tier tribunal section).
If it has been more than 13 months, you’ll need to show that the DWP has made a mistake to be able to apply for a mandatory reconsideration. This could be that they got the law wrong or overlooked some evidence you may have sent them. This is called a ‘specific grounds revision.’ You should speak to a benefits adviser to make sure you have grounds to make a request after 13 months.
If a late request after 13 months is refused, the DWP may say that it hasn’t counted as a mandatory reconsideration request and so you have no right to appeal to the First-Tier tribunal. You may consider writing to the First-tier Tribunal to argue that the DWP has considered the mandatory reconsideration request and so you are able to appeal. You should contact a benefits adviser if you are considering this.
If you believe the decision the DWP has made is incorrect, you can appeal to the First-tier Tribunal. You must be able to evidence to the first-tier Tribunal that the DWP has considered you mandatory reconsideration application. Send a copy of the mandatory reconsideration notice to the Tribunal when you appeal.
If you have not received a mandatory reconsideration notice, remind the DWP that this needs to be done even if they believe your claim is not valid. If you are still unable to obtain a mandatory reconsideration notice, you could still consider appealing to the First-tier Tribunal, but you would need to provide evidence that an application was made. The tribunal will decide whether the evidence is sufficient for them to consider your case.
Also supply any documents that support your appeal that have not already been supplied to the DWP, and a summary of why you think the DWP decision is wrong.
- You can request to attend the hearing when you make the application if you wish.
- The tribunal must deal with the case fairly and justly.
- The tribunal can ask you or the DWP for further information to help them make a decision. It is important to respond to any request or your appeal could be struck out.
- You can have a representative who can help present your case to the tribunal. You would need to give the tribunal written notice of this at least 14 days before the hearing.
You must make the appeal no later than one month after the date you have been sent the mandatory reconsideration notice. Applications after one month can still be treated as being in time if neither the DWP nor anyone who has been added to the appeal objects. It is not common for the DWP to object, so it is worth making an application even if late. Explain why your application is late when you apply.
You will receive a decision notice; this will detail the tribunals decision and the reasons for it. If you have won, the DWP should carry out the tribunal’s instructions straight away.
If you lose, you may be able ask for a set aside on procedural grounds but only if it is in the interest of justice to do so. You may also be able appeal to the Upper Tribunal. You’d need to be able to show that there has been an error of law. Speak to a benefit adviser before considering either option.
More information on the First-tier Tribunal process can be found on the GOV.UK website.
Fraud and civil penalties
The DWP may say you have committed fraud if you failed to tell them about something that would affect your claim or if you deliberately misrepresented information. If you are accused of fraud, you should seek legal advice as soon as possible.
You should have a formal interview ‘under caution’ and will be given around two weeks’ notice. Use this time to try and find someone, preferably a solicitor, to sit in the interview with you.
The DWP may ask for additional information. If you do not provide this, your benefit payments may be stopped. Your benefit may also be stopped whilst the investigation takes place.
If you are found guilty of fraud, you may be prosecuted. Again, if it looks like this may happen it is important to get legal advice on your options.
If you haven’t committed fraud but the overpayment has been caused because you gave an incorrect statement or incorrect information and did not try to correct the error, you may receive a civil penalty. The overpayment will also need have occurred after 1 October 2012 and be more than £65. The civil penalty would be added to the overpayment and recovered in the same way.
DWP Discretion to waiver (write off)
The DWP can agree to waiver (write off) the overpayment. However, this will usually only be in exceptional circumstances where recovery action will result in severe welfare issues for you or your family.
The DWP will also look into the circumstances of the overpayment. It may be in your favour if the overpayment was the result of a DWP error rather than because you gave incorrect information or didn’t give them relevant information.
The DWP should consider:
- your financial circumstances and those of your household;
- whether the recovery of the debt is impacting your health or that of your family;
- whether you can demonstrate that you did not benefit from the money that was paid; and
- any other factor which appears relevant to the decision maker, or which indicates recovery would not be in the public interest.
You can use our sample letter to ask the DWP to waive your debt. Provide as much information as possible to support your request. This should include the following.
- Any evidence that the overpayment was not caused by you and any steps you took to prevent the overpayment. This may include details of information you provided to the DWP and when.
- A list of all your debts and the steps taken to manage these.
- Full details of your income and expenditure.
- Bank statements for the last six months.
- Evidence of exactly how recovery of the debt would have an excessive negative impact on the welfare of you and your family.
- Evidence that your ill health is being made worse or caused by financial hardship in the form of a letter from a medical professional. For example, a GP, consultant, psychiatric nurse, support worker or welfare advisor.
You can make an initial request through your Universal Credit journal if you have one, or you can write to the address on the letter you've received.
If a waiver is not agreed, you do not have the right to appeal. You could look to complain to the DWP. See the following Complaint section for more information.
If you are unhappy about the service you have received from the DWP, you can use the DWP's complaint procedure. Contact the office that dealt with the decision and make the complaint. You can find relevant details to contact on the GOV.UK website.
The complaint should be dealt with within 15 working days. If you are not satisfied with the outcome, ask that the complaint is passed to a senior DWP manager.
If you are still not satisfied with the outcome, you can escalate the issue to the Independent Case Examiner within six months. This can be done by phone on 0800 414 8529 or by writing to: The Independent Case Examiner, PO Box 209, Bootle L20 7WA.
If you are still unhappy, you could ask your MP to refer the case to the Parliamentary and Health Service Ombudsman.
The Parliamentary and Health Service Ombudsman deals with complaints about maladministration and delays by the DWP. You can begin a complaint by completing the online form and sending this to your MP. You need to do this within one year of becoming aware of the matter.
There may be a variety of ways to deal with money owed to a benefit overpayment and any other debts you may have. Your best option will depend on your situation.
To find out more, see our Ways to clear your debt fact sheet
Deductions from Universal Credit
Overpayments can be recovered from most benefits. As you are under the Universal Credit system deductions tend to be at either:
- 25% of your standard allowance if you have earned income or have been found guilty of an offence; or
- 15% of your standard allowance in all other cases.
Your standard allowance is the basic amount your household will receive each month before any additional payments are added for things like childcare.
If the amount being recovered is causing financial difficulty, you should use your budget sheet to support asking for the amount to be reduced.
You should have no more than three deductions from Universal Credit at any one time and a maximum of 25% of your standard allowance can be taken.
Direct earning attachment
Overpayments can also be recovered from your wage via a direct earnings attachment.
You and your employer will be sent a notice setting out how much will be deducted. The deduction will be a percentage of your net income (your pay after tax and deductions have been taken). You can find the amount you should have deducted on the GOV.UK website.
If the amount being recovered is causing financial difficulty, you should use your budget sheet to support asking for the amount to be reduced. The DWP Benefit Overpayment Recovery Guide states that a reduced payment can be considered if it is causing you hardship.
You should not be left with less than 60% of your net earnings. This is called the ‘protected earnings proportion’.
Whilst not common, the DWP can look to take Sheriff court action. This would usually only be done if you are no longer claiming benefits and you cannot agree a repayment plan.
See our Sheriff court action factsheet.
Time limit for recovery
The Prescription and Limitation (Scotland) Act 1973 sets out the rules on how long a creditor (who you owe money to) has to take certain action against you to recover a debt.
For benefit overpayments, time starts to run from the date a final decision was made to recover the debt.
If the DWP has decided that the overpayment should be recovered from you and the DWP has not already started Sheriff court action for the debt, HMRC will be out of time to collect the debt if:
- you or anyone else owing the money (if your debt is in joint names) have not made a payment towards the debt during the last twenty years; and
- you have not written to the DWP admitting you owe the debt during the last twenty years.
If the DWP has decided that you have been overpaid a benefit, but they have not decided that it should be recovered from you, the DWP will be out of time to collect the debt if:
- you or anyone else owing the money (if your debt is in joint names) have not made a payment towards the debt during the last five years; and
- you have not written to the DWP admitting you owe the debt during the last five years.
The DWP can recover overpayments from some benefits and wages without taking court action.
Time limits for the recovery of benefit overpayments are complicated. You may need legal help to check whether an overpayment can still be recovered from you. Contact us for advice about finding the right type of legal help
GOV.UK for information on finding legal advice www.gov.uk/find-legal-advice
Independant Case Examiner Phone 0800 414 8529 www.gov.uk/government/organisations/independent-case-examiner
The Parliamentary and Health Service Ombudsman Phone 0345 015 4033 www.ombudsman.org
Turn2us for information on finding a benefits adviser https://advicefinder.turn2us.org.uk/
Universal Credit helpline Phone 0800 328 5644