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Wednesday, 3 October 2023

What to do if your benefit is overpaid

If you're paid too much benefit it's called an 'overpayment'. It's important to report any changes to the office that deals with your benefit as soon as possible and to answer any letters you get about overpayments promptly.

Why overpayments happen

Overpayments usually happen when your benefit hasn't been adjusted to match your changed circumstances. If your circumstances have changed, you must tell the office that deals with your benefit straight away. Overpayments can also be caused by administrative errors.

Some examples of changes you need to report include:

  • starting work
  • a change of job or a change in the hours you work
  • a change in the amount of income you get
  • moving house
  • a change in your health - maybe an illness or disability has got better or worse
  • your child leaving home
  • taking in a lodger
  • moving in with a partner, or a partner moving in with you

How do you know if you've been overpaid?

You will get a letter letting you know you've been overpaid. The letter will normally tell you:

  • how much you've been overpaid
  • why the overpayment happened
  • whether you have to pay the money back
  • whether you can appeal against the overpayment decision
  • what's going to happen next

If you think you've been overpaid but haven't heard anything, don't wait for your benefit office to contact you. Get in touch with them straight away to explain the situation. They'll look into it and tell you if you're getting the right amount of benefit.

If you don't declare an overpayment

From 1 October 2023 you may have to pay a £50 financial penalty called a ‘civil penalty’ if you’re benefit is overpaid because you:

  • gave incorrect information and didn’t take reasonable steps to correct your error
  • didn’t tell DWP or your local authority about a change without a reasonable excuse
  • didn’t give DWP or your local authority information without a reasonable excuse

If you know you've been overpaid but don't do anything about it, you could be suspected of committing benefit fraud. It's the same if you deliberately fail to report a change in your personal circumstances. If you're prosecuted for benefit fraud you could be fined or get a prison sentence, as well as having to repay the overpayment. See 'What happens if you're suspected of benefit fraud?' for the rules about loss of benefit entitlement following a benefit fraud offence.

Do you have to pay the money back?

If the overpayment was your fault - perhaps you didn't report a change in your circumstances or gave wrong information - you'll have to pay it all back. If it was caused by administrative error you may be asked to pay it back, particularly if you could reasonably be expected to realise you were being overpaid.

Housing Benefit and Council Tax Benefit

If there's been an overpayment because of an administrative error, you may have to repay it if, at the time of the payments, you could reasonably have been expected to realise you were being overpaid.

Tax credits

HM Revenue and Customs (HMRC) send you an award notice whenever your award changes. They ask you to make sure that the information about your personal circumstances shown on your award is correct and complete. If anything is wrong, missing or incomplete you need to contact HMRC. For more information about how HMRC deal with tax credits overpayments download the HMRC leaflet 'What happens if we have paid you too much tax credit?'

Disability benefits

From time to time the amount of disability benefits you may get will be reviewed if you receive any of the following:

  • Employment and Support Allowance
  • Disability Living Allowance
  • Attendance Allowance
  • Incapacity Benefit
  • the 'disability premium' with another benefit like Income Support or Housing Benefit

If your condition has improved when the review takes place, you may no longer qualify for benefit. You won't have to repay anything you've already received unless you could reasonably have been expected to realise that the improvement in your health would affect the amount of benefit you get.

How you pay back overpayments

If you're no longer in receipt of the benefit that was overpaid, you'll usually receive a bill to cover the overpayments.

Before you start making repayments, you'll be given time to:

  • say if you think the decision to make you repay the money is wrong
  • agree a payment plan with the office that deals with your benefit

If you are still in receipt of benefit, a certain amount will be taken off your benefit until you've paid back all the overpayment. You have the right of appeal against most overpayments; deductions will normally be made from your benefit one calendar month from the date you were told about the overpayment.

Housing Benefit

If Housing Benefit's paid directly to your landlord, he or she may be asked to repay the money depending on whether they caused or contributed to the overpayment. But if the overpayment was your fault, you may have to repay it.

Tax credits

Your tax credits award is usually reduced until the money's paid back. How much it's reduced by depends on the type and amount of your award. If you no longer qualify for tax credits, you can repay the money as a lump sum or in instalments.

How to appeal

You have the right to appeal against decisions made about your benefits - including most overpayments. You can also appeal against the way your case has been handled.

Where to get help and advice

You can ask the office that deals with your benefit to help you with your queries including questions about overpayments. You can also get free, independent advice from the Citizens Advice Bureau.

Additional links

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