Overpayments: benefits and tax credits
Key information
This section contains information about:
- Overpayments of social security benefits and tax credits
- Why they occur
- The rules about when overpayments have to be repaid
Applies to: England, Wales, Scotland and
Northern Ireland
Please note: We strongly recommend that anyone
has been told they have been overpaid on benefits or tax credits
and people facing an allegation of fraud should seek advice from a
benefits or legal adviser. See Getting advice for more
information.
See also Fraud investigations: benefits
and tax credits
Index
You can read through this information sheet or go directly to
the sections you want to read by clicking on these links:
Overpayment of benefits
This section answers the following questions about overpayment
of benefits:
What is an overpayment of benefit?
An overpayment of benefits occurs if you are paid:
- A benefit you are not entitled to, or
- More benefit than you are entitled to.
Some of the reasons why this may happen include:
- You give incorrect information when you claim benefit
- You do not report a change in your circumstances
- The benefit office makes an administrative error
- Information that you give the benefit office is not taken into
account correctly.
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How would I know if I had been overpaid?
You might realise that you have been overpaid because:
- The amount you have received is incorrect
- You have given incorrect information
- That you have not reported a change.
You may also receive a letter from the benefits office telling
you that you have been overpaid.
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What should I do if I think I am being overpaid?
If you think you are being overpaid or your award of benefit is
incorrect, you should notify the office paying the benefit in
question of any error or omission promptly. This may
be:
If you are unsure whether the amount you receive is correct,
seek advice from a benefits adviser. See Getting advice
Don’t delay. The longer an incorrect award goes on, the bigger
any total overpayment will be.
If the benefits office decides that your award of benefit is
incorrect, they will:
- Recalculate your correct entitlement and revise your award
- Calculate how much benefit has been overpaid, and will also
decide whether the overpayment should be recoverable. They will
also decide if a civil penalty
should be applied
- Notify you of your recalculated award and that you have been
overpaid. Please note that you may receive one letter telling you
this or separate letters about your new award and the
overpayment.
The calculation of your correct benefit, the amount overpaid,
and the decisions whether it is recoverable and whether a civil
penalty should be applied, will be carried out by your usual
benefit delivery centre/benefit office. You have the right to
appeal against one or all of these decisions if you think they may
be wrong.
The Department for Work and Pensions has a number of special
offices called debt
recovery centres (link opens in a new window), which are
responsible for collecting repayments of amounts overpaid.
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Will I have to repay the overpayment?
Many, but not all, benefit overpayments are recoverable.
Additional rules apply to overpayments of Housing Benefit and
Council Tax Benefit. See Recovery
of Housing Benefit and Council Tax Benefit for more
information.
A benefit overpayment is recoverable from you if it is
caused by your:
- Misrepresentation, or
- Failure to disclose.
These terms are defined below.
Misrepresentation
Misrepresentation means that you have given information that is
not correct or is incomplete.
It may happen when you:
- Make a claim for benefit by telephone or on a claim form
- Fill in a form or write a letter or sign a document
- Speak to someone at a benefit office.
The benefits office might decide that it was misrepresentation
if you gave wrong information on a claim form and the award has
always been incorrect.
To avoid misrepresentation, make sure that
you:
- Answer questions that the benefit office asks you correctly,
checking your facts first if unsure
- Do not ignore questions
- Check that information is correct before you sign any form
- Check the decision letter you receive when benefit is
awarded.
Failure to disclose
A failure to disclose might apply to an award of benefit that
has become incorrect because you either failed to:
- give accurate and complete information that you were asked to
give, or
- report a change of circumstances that you could have reasonably
been expected to know might affect your benefit.
Failure to disclose may happen where you:
- Make a claim for benefit or complete a form
- Speak to someone at a benefit office
- Do not report a change which you could reasonably be expected
to know affects your benefit.
To avoid failure to disclose, make sure
you:
- Answer all questions the benefits office ask you accurately and
completely
- Read all letters from the benefit office
- Read leaflets sent to you about your benefits
- Note the changes that you must report
- Report any changes which you think may affect your
benefit.
What if I did not misrepresent or fail to disclose?
If the benefits office decides that the overpayment was not
caused by your misrepresentation or failure to disclose, the
overpayment will not be recoverable and you cannot be made to repay
it.
No civil penalty can be imposed if the overpayment is not
recoverable.
However, even if an overpayment is not recoverable the benefits
office may ask in their letter whether you want to pay it back
anyway. If this happens, seek advice from a benefits adviser.
You can use our Find an Adviser tool to
find a local one.
Please note: Your duty to report changes of
circumstances is set out in the letters awarding benefit to
you. If for some reason you were not notified of your
obligations, an overpayment may not be recoverable.
For example, if you are visually impaired and asked the
Department for Work and Pensions to provide letters and leaflets
about your benefits in large print but you only ever received
letters in ordinary text, you may be able to argue you were
not properly notified of your obligations to report specific
changes of circumstances.
Please note: As part of the Welfare Reform Act 2012 changes, all
overpayments of Jobseeker's Allowance,
Employment and Support Allowance and
housing costs paid with Pension Credit
and Universal Credit will in the
future be recoverable, whatever the cause of the overpayment.
However, the Government has not yet set a date for this rule to
come into effect.
Will I always have to repay if I misrepresented or failed to
disclose?
Even if an overpayment is recoverable, the benefits office can
decide not to seek recovery or may accept partial recovery.
You can ask the debt recovery centre not to recover or to accept
a lower rate of repayment. They are unlikely to agree unless you
can show that you did not know that you were being overpaid and
that it is very difficult for you to repay. You should contact the
office shown on the letter you have received about the
overpayment recovery to discuss this. We also recommend that
you seek advice from a benefits adviser. See Getting advice
See also the Directgov information on benefit overpayments
(link opens in a new window)
Can I be made to repay my partner’s overpayment?
Probably not. Overpaid benefits can only be recovered from the
person whose misrepresentation or failure to disclose caused the
overpayment and cannot usually be recovered from anyone other than
the claimant.
If you or your partner are overpaid the following benefits and
you were a couple at the time of the overpayment, it may be
recovered from either partner's ongoing benefit as long as you
remain a couple:
Seek advice from a benefits adviser if you are asked to
repay your former partner’s overpaid benefit. See Getting advice
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How is an overpayment recovered?
A recoverable overpayment may be recovered by:
- Deduction from your on-going benefit
- From arrears of another benefit due to you
- Direct recovery
- Recovery through the courts.
If you are receiving benefits, any overpayment will usually be
recovered by a direct deduction from these. Overpayments can be
recovered from most benefits you may be getting.
There is a maximum rate of deduction from:
- Income Support
- income-based Jobseeker’s Allowance
- income-related Employment and Support Allowance
- Pension Credit.
For 2012/13, this is £10.65 a week, or £14.40 where the
overpayment was due to fraud or you have agreed to a benefit
penalty. See Fraud investigations: benefits
and tax credits
There is no maximum rate of recovery from other benefits, but
you can always try to negotiate a lower rate if the amount the
Department of Work and Pensions ask for is too high.
If the benefits office is not able to recover from your ongoing
benefits, you will be asked to repay the amount in full, or to make
an alternative repayment arrangement.
If you do not repay, you may face court action. This must
usually begin within six years after the date of the recovery
decision.
If you are threatened with court action, you should seek advice
from a benefits adviser or debt adviser as a matter of urgency. See
Getting advice
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What if I can’t afford to repay?
You would not normally be expected to make repayments if this
would leave you without enough money to meet your basic living
costs. You would usually need to provide a financial statement to
show that you cannot afford to repay.
Even if the benefit office agrees not to recover for the time
being, they may contact you again or start recovering from your
benefit at a later date.
If you have been overpaid on benefits and can’t repay, you
should seek advice from a benefits adviser as soon as possible. See
Getting advice
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What should I do if I don't think I have been
overpaid or that I should repay?
With all benefits, If you do not agree that you have been
overpaid or do not think that this is recoverable from you, you can
ask for this to be looked at again and appeal against the decision.
See our information sheet on Challenging
benefit decisions
The decision letter about the overpayment should include a
breakdown of:
- How much you were overpaid each week
- For what period you were overpaid
- The total that has been overpaid.
If you think the benefits office may have got the amounts or the
dates wrong, you should contact them.
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How do I avoid an overpayment of benefit?
There are a number of ways you can help to avoid the risk of an
overpayment:
- Make sure that you provide accurate information and answer
questions correctly when you make a claim; answer questions from
the benefit office; or report a change in your circumstances
- Read letters and leaflets carefully. For example, check
that your details are correctly recorded on your benefit award
notice. Read the letters and leaflets that come with your award
notice carefully to ensure you know what changes to your
circumstances you need to report to the benefits office.
- Report changes in your circumstances as soon as you know about
them. See Change in circumstances
- Report any unexpected or duplicate payments of benefit you
receive to the benefit office.
See also Getting advice and
Further information
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How
are overpayments of Housing Benefit and Council Tax Benefit
recovered?
Most overpayments of Housing Benefit (HB
England, Scotland, Wales) (HB
Northern Ireland) or Council Tax
Benefit are recoverable.
However, they are not recoverable if:
- It was caused by ‘official error’ (this means an error by the
local authority, the Department for Work and Pensions or HM Revenue
and Customs), and
- You did not contribute to the error, and
- You could not reasonably have been expected to know that you
were being overpaid.
Any overpayment of Council Tax Benefit credited to your Council
Tax account for a future period is always recoverable.
Overpayments may be recovered from the person who received the
overpayment or a person who caused the overpayment.
If the overpayment was paid to your landlord, seek advice from a
benefits adviser if the local authority try to recover
this from you as this may not be correct. See Getting advice
Civil Penalties
The local authority has to same power to impose a civil penalty
as the DWP. If the local authority decides that an overpayment
should be recoverable, they will also need to decide whether the
overpayment resulted from your negligence in providing incorrect
information, and whether you have a reasonable excuse for your
failure to provide correct information. However, the local
authority should not apply a penalty if your failure to
provide correct information resulted in overpayments of more than
one benefit and the DWP have already applied a civil penalty
to the benefit they overpaid.
DWP guidance to local authorities (link opens in new window, pdf
63kb) advises that "Where the same error or failure
affects different benefits, whilst those benefits identified may
need a separate overpayment decision, for the purpose of the
penalty it will be treated as one decision"
For example, if you have been overpaid Income Support which you
were not entitled to and Housing Benefit was awarded incorrectly as
a result of your entitlement to Income Support, only one civil
penalty can be imposed.
See our information on Civil
penalties
How are Housing Benefit/Council Tax
Benefit overpayments recovered?
An overpayment of Housing Benefit (HB) or Council Tax
Benefit (CTB) may be recovered by:
- Deduction from your on-going benefit, which is the
usual HB overpayment recovery method. If the overpayment
was made while you were a member of a couple, the overpayment may
be recovered from benefit paid to you or your partner so long as
you remain a couple
- Adjustment of your rent account if you are a local authority
tenant (HB)
- Adjustment of your Council Tax bill or your Council Tax
account, which is the usual way of recovering a CTB overpayment
(CTB)
- Deduction from other benefits: if you are no longer receiving
HB, the local authority may ask other benefits offices, such as the
Department for Work and Pensions (DWP), to recover by deduction
from other benefits, but only if the overpayment was due to your
misrepresentation or failure to disclose
- Direct recovery from you if the local authority is not able to
recover the overpayment from on-going benefits. In this case,
the local authority would write to you asking you to repay or
contact them to arrange repayment
- Court action: this must normally begin within six years of the
decision that the overpayment is recoverable. Seek advice if you
are in this situation from a benefits adviser. See Getting advice
- The local authority do not have to recover in every
case and may agree to reduce or write off the overpayment in
exceptional circumstances.
How do I challenge an HB/CTB overpayment decision?
If you do not agree that you have been overpaid, or do not think
that this is recoverable from you, you can ask for this to be
looked at again and appeal against the decision. See our
information sheet on Challenging benefit
decisions
If the overpayment is recoverable from you, there is no right of
appeal against the local authority’s discretion not to recover, but
you can make a complaint if their decision is not reasonable.
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Avoiding overpayments of Housing Benefit and Council Tax
Benefit
- Every time you move home, write to your local authority benefit
section to let them know. If you move to a different local
authority area, you will also need to make a new claim with the new
authority
- Report any changes to your household or who lives with you. See
Change of circumstances
- Let your local authority benefit department know if
you stop receiving Income Support,
income-based Jobseeker’s Allowance,
income-related Employment and Support
Allowance or Pension Credit
Guarantee Credit. You will need to give details of your new income
and capital
- Be careful to report increases in earnings, other income or
capital.
Civil penalties for benefits overpayments
From 1 October 2012, the Department for Work and Pensions
(DWP) and local councils have the
power to impose a fixed rate civil penalty on some claimants who
have been overpaid a social security benefit.
The penalty will be £50. It will be added to the total amount of
the overpayment and will be recovered by the same method.
These rules on civil penalties only apply to benefits and not to
tax credits.
This section answers the following questions:
When can a civil penalty be applied?
For a civil penalty to apply the overpayment must:
- have occurred wholly after 1 October 2012, and
- be an amount of £65.01 or more, and
- must be recoverable.
The overpayment of benefit must have been caused by a
person:
- making an incorrect statement, or
- negligently giving incorrect information,
and
- that person not taking ‘reasonable steps’ to correct the
error.
A fixed penalty will not be applied if the DWP or local
authority decides to take action under benefit fraud provisions.
Possible actions under these rules can include:
- prosecution
- a formal caution
- and/or a benefit penalty.
How many civil penalties can be imposed?
For each overpayment, only one civil penalty can be applied.
What circumstances may lead to a benefit decision maker
considering a civil penalty?
DWP decision makers have issued guidance on how to decide when
it may be appropriate to impose a civil penalty. This gives
examples of the sorts of factors a DWP decision maker should
consider when deciding whether to impose a civil penalty.
These include:
- A decision maker should only apply a penalty when they are
satisfied that a person has ‘negligently’ given incorrect
information or failed to disclose information that they are aware
of. The guidance defines 'acting negligently' as “acting
carelessly, not paying sufficient attention to the task in hand, or
disregarding the importance of what is required to be done ...
“.
- The person must have failed to take ‘reasonable steps’ to
correct the error. The guidance advises that this means “sensible
or practicable actions or interventions to correct the error”. What
is considered to be reasonable will depend a great deal on the
specific circumstances of each case. It will be important to make
sure that the decision maker is aware of all the relevant factors
which may have resulted in an incorrect statement being
made. Also, that they know of any reasons why that
person may not have been aware it was incorrect or been able to
obtain any more up-to-date information.
- A penalty should not be applied if the person has a ‘reasonable
excuse’ for their failure to provide the correct information or for
providing it late. The guidance gives the example of a person who
has not been able to obtain up-to-date confirmation of the amount
of their occupational pension from their pension provider.
Making a decision
The decision to impose a civil penalty will be made at the same
as the overpayment decision. When the DWP realises you may have
been overpaid benefit, they will look again at your award and make
a decision with the corrected award of benefit for the period that
the overpayment applies. At the same time they will decide whether
the overpayment should be recoverable from you. Only if the
overpayment is recoverable will they go on to consider whether a
civil penalty should be applied.
You will get a decision letter that states:
- that you have been overpaid an amount of benefit and explains
the period of the overpayment, the weekly amount of the incorrect
payment and the total amount overpaid
- whether the overpayment is considered recoverable from
you,
- if a civil penalty will be applied.
If you disagree with any [or all] of these aspects of the
decision you can appeal. If you appeal against the decision to
apply a civil penalty you will not to show that your actions were
reasonable in your specific
circumstances.
Couples
Where benefit is paid jointly to a couple, a civil penalty can
be imposed on either partner or on both partners jointly. However
only one penalty can be imposed for each overpayment.
If one partner was unaware, and could not reasonably be expected
to be aware, that their partner had made a negligently incorrect
statement, then no penalty can be applied to that person, but a
penalty may be applied to their partner.
Appointees and other people who help with claims
A civil penalty can be imposed on any person who has made a
negligently incorrect statement in connection with a claim for
benefit. If you have helped another person make a claim or if you
are an appointee for them, it is possible that you may
be responsible for the civil penalty, even if the actual
overpayment of benefit is the responsibility of the benefit
claimant
Further information
Overpayment of tax credits
This section answers the following questions about overpayment
of tax credits:
Tax credit awards are calculated annually and
your award for a year is only finalised after the end of that tax
year.
An overpayment of tax credit will be
calculated if you received:
- more than your entitlement for that year, or
- a payment to which you were not entitled.
Your tax credit entitlement may also be
adjusted within a tax year to avoid an end-of-year overpayment.
The reasons why a tax credit overpayment may
happen if:
- you give incorrect or incomplete information when making or
renewing a claim
- you fail to notify a change of circumstance
- you don’t report significant increases in income
- you don’t renew your tax credits on time
- HM Revenue and Customs (HMRC) make an error.
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How would I know if I have been overpaid?
You may know or suspect that you have been
overpayment if:
- you receive a letter or notice telling you that you have been
overpaid
- you realise that you gave incorrect information
- you realise that you have not reported a change
- your tax credits stop after you missed the renewal
deadline.
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What should I do if I think that I am
being overpaid?
All overpayments of tax credits are
recoverable, so make sure you take steps to correct your award.
You should:
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Are all overpayments of tax credits recoverable?
Tax credits are assessed on an annual basis
and your total entitlement for a year is not finalised until the
end of that tax year. This means that an element of under- and
over- payment is built into the system. It is expected that all
overpayments will be carried over and recovered during the next tax
year.
This means that all tax credits overpayments
are recoverable.
However, HMRC code of
practice guidance (COP26) (link opens in a new window PDF file size
145kb) states that an overpayment will not be recovered if it
was due to a mistake at the tax credit office and not through any
error of yours.
If both you and the Tax Credit Office made a
mistake, they will decide whether to recover some or all of the
overpayment.
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Who can the overpayment be recovered from?
Overpayments are recoverable from the
claimant(s) who were overpaid.
This means that it is recoverable from you, if
the overpayment was made on your claim as a single person, or from
you and your partner or former partner, if the overpayment was made
on your joint claim as a couple.
If you have separated from a partner, you
should not normally be asked to repay more than 50% of the
overpayment. You can agree with your former partner to pay
different proportions of the overpayments each – example, one
paying 30% and the other 70%. However, if this agreement is not
kept, you may be asked to repay at least 50% of the remaining
debt.
HMRC code of practice
guidance (COP26) (link opens in a new window PDF file size
145kb) has more information about recovery of tax credit
overpayments.
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How are tax credit overpayments recovered?
Tax credit overpayments may be recovered:
- By deduction from your on-going tax credit award
- Direct recovery from you
- Court action.
If you are still receiving tax credits, the
overpayment will be recovered from your on-going award.
If you are a member of a couple and the
overpayment happened before you and your partner made a joint
claim, the overpayment made to you cannot be recovered from your
new joint claim. Your award may be reduced by 10%, 25% or 100% of
the amount you would otherwise receive, depending on your
circumstances. See HMRC code of practice
guidance (COP26) (link opens in a new window PDF file size
145kb) for further information.
If recovery from your on-going tax credits is
not possible, you will be asked to repay the full amount and given
contact details to make a different arrangement. If the overpayment
was on an award paid on your joint claim as a member of a couple,
the overpayment may be recovered from you or your joint
claimant.
If you do not repay, you may face court
action. This must normally be started within six years of the
overpayment decision.
If you are threatened with court action, you
should seek advice from a benefits adviser as a matter of urgency.
See Getting advice
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What if I can’t afford to repay?
For some people, having to pay back an
overpayment of tax credit may cause financial problems.
You can ask HMRC not to recover some or all of
the overpayment if recovery would cause you hardship or you have
other special difficulties, such as mental illness, illness or
disability.
You may be able to negotiate a suspension of
recovery, reduction of the amount to be recovered or for the
overpayment to be written off.
See HMRC code of practice
guidance (COP26) (link opens in a new window PDF file size
145kb) and additional HMRC guidance
Difficulty repaying overpaid tax credits? (link opens in a new
window)
There is no right of appeal against a decision
to recover a tax credit overpayment. However, you can make a
complaint (link opens in a new window) if unable to reach
agreement.
If you can't afford to replay an overpayment,
we recommend that you get advice from a benefits adviser. See
Getting advice
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What should I do if I don't think I have been overpaid or I
should repay?
If you do not agree that your tax credits have
been overpaid, you should appeal against the decision on how much
your correct award should have been.
If you have been overpaid, you cannot appeal
against the decision to recover the overpayment. However, you can
make a
complaint (link opens in a new window) if you unable to reach
agreement on recovery.
See our information section on
challenging benefit decisions and the information on the HMRC
website about
how to challenge a tax credit overpayment decision (link opens in a
new window)
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How do I avoid a tax credit overpayment?
See also Getting advice and
further information
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