There is a chance that you’ll experience overpayments and deductions from your Universal Credit claim. In our experience, this is quite common, so it’s something you should be aware of. If it happens to you, it could potentially cause financial difficulty.
So in this section we highlight the main reasons why overpayments and deductions occur, and recommend some ways to manage them and keep your claim running smoothly.
Overpayments and Deductions
Overpayments
An overpayment is when you are paid either a benefit you are not entitled to, or more benefit than you are entitled to.
Overpayments tend to happen because you have given incorrect information, you have not told the Department something it needed to know, or a mistake was made with your payment.
The Department can recover all overpayments of UC, no matter who caused the overpayment.
The details of your overpayment, such as the reason why you have been overpaid and the period of time you were overpaid for, will be explained on your overpayment letter.
This could also appear as a notification on your UC online account. This may be the first time you are made aware that an overpayment has been made.
IMPORTANT: There are limits on what can be deducted from your UC payment
The total amount of deductions due to overpayment will not normally exceed 25% of your standard allowance and any child amount, although there can be exceptions to this.
Up to 25% of your standard allowance can be deducted to repay a UC advance payment. The repayment period depends on what type of advance is being repaid.
Each third party deduction is set at five per cent of your UC standard allowance. No more than three third party deductions may be made at a time.
Deductions for other debts
Debt deductions are made when a benefit claimant has arrears of essential household outgoings (like rent, rates or energy bills). Money can be deducted from your Universal Credit payment and paid directly to the service provider. This is called a ‘third party deduction’.
Deductions can also be taken from earnings after your UC claim ends.
You can contact Debt Management and ask for the deductions to be reduced if you do not have enough UC to live on.
If you are claiming in Northern Ireland, you can find contact details for Debt Management here: Debt Management
If you are claiming in England, Scotland or Wales, you can find contact details for Debt Management here: DWP Debt Management customer service standards
If you have any concerns contact an independent advice agency for support.
Financial support for overpayments and deductions
If an overpayment is not your fault, in exceptional circumstances the Department for Communities or DWP has discretion to waive recovery of all or part of an overpayment. Information on waivers can be found here: Overpayments of benefits and financial support (Northern Ireland); Write-off and waiver (Great Britain)
A waiver must be requested in writing and should outline how the recovery of the overpaid amount would be detrimental to your health or the health of someone in your household. A template letter can be found here: Overpayments in social security and the discretionary waiver
You will normally need to provide evidence of the impact recovery of an overpayment is having on you, for example a letter from a professional such as a GP, consultant, psychiatric nurse or support worker. It is advisable to contact an independent advice agency.
There is no right of appeal against a decision not to grant a discretionary waiver.
You can ask for a ‘financial hardship decision’. This will be granted if it is decided you do not have enough money to live on because of deductions from UC payments and this is causing financial hardship. You would have to show that this hardship has been long standing, is not expected to improve in the near future and is so severe that it is not reasonable to expect you to make even reduced repayments.
If your deductions are reduced, the new reduced deductions will apply from the start of your next Universal Credit assessment period.
If your financial situation changes in the future and you can afford to pay more towards your overpayment, your deductions will go back up to the normal amount.
Rent arrears caused by UC mistakes and delays
Issues with UC could result in delays in the payment of Housing Costs Element.
Universal Credit does not tell landlords when a tenant makes a claim, but will contact the landlord to get their bank details so housing cost payments can be made directly to the landlord. If landlords do not want to provide this information by phone, they can do so by requesting a direct payment to be set up.
In England and Wales, the UC housing costs payment normally goes to the claimant, who then has to pay their landlord. People in Scotland can choose which payment method they want for housing costs.
You could lose your home if you don’t pay your rent. If your landlord is a social landlord or a housing association, they will have to follow the proper procedure before this happens. Part of this procedure is to work with you to try to sort out the problem.
Your landlord can take you to court to evict you if you owe rent but before they do this, they must try to sort out the debt in other ways.
There is a Pre Action Protocol for rent arrears. This means that the court won’t hear the case unless your landlord has followed certain steps. A social landlord (NI Housing Executive/Local Authority) or a housing association should not try to evict you if your rent arrears have been caused by a delay in a benefits application.
It’s really important to get advice and assistance to resolve rent arrears as soon as possible. You can access advice from advice agencies like Housing Rights or your housing officer may be able to refer you to independent advice. Very often, an agreement can be reached to save your home. The earlier you get in touch the easier this will be.
“Make sure you communicate with your landlord regularly to double check your rent has been paid”
UC:Us Team
If you are a private tenant
Not all the same protections exist for Private Tenants. However, your landlord still has to follow the proper process before seeking to evict you for rent arrears.
It is especially important to seek advice and assistance as quickly as possible if you are a private tenant.
An advice agency may be able to assist in resolving the issues with your UC application. They can also help you to negotiate a rent repayment with your landlord or assist with access to mediation between you and your landlord. This could help you to save your tenancy.