Universal Credit and benefit overpayments: what to do

Overpayments happen for all sorts of reasons: a change you reported late, a change DWP was told about but did not act on, an error in a form, or a mistake by DWP itself. An overpayment is not the same as being accused of fraud. Most are treated as ordinary debts, and there are rules that limit how much can be taken from you each month.

This guide covers benefits paid by the Department for Work and Pensions (DWP). Housing Benefit overpayments are dealt with by your council, and tax credit overpayments by HMRC unless they have been moved to DWP: see HMRC debt.

Do you have to pay a benefit overpayment back?

It depends on which benefit was overpaid and why.

So for Universal Credit, arguing that DWP made the mistake does not stop the money being recoverable, although it can help a request to reduce or waive the debt. For older benefits, whether the error was DWP’s is often the whole question, so it is worth challenging if you told DWP about the change in time. Keep any record of when you reported it, such as a journal message, letter or note of a phone call.

How do you challenge an overpayment decision?

Start by reading the decision letter carefully. It should say which benefit was overpaid, for what period, how much, and why.

1. Ask for a written statement of reasons if the letter does not explain it properly. Do this within one month of the decision. Asking for one extends the time you have to challenge.
2. Ask for a mandatory reconsideration within one month of the date of the decision. On Universal Credit you can do this through your online journal. You can ask later if you have a good reason, such as being in hospital or a bereavement.
3. Appeal to a tribunal if you disagree with the reconsideration. You normally have one month from getting the mandatory reconsideration notice.

You can challenge whether you were overpaid at all, the period, and the amount. National Debtline says a late request can still be made up to 13 months after the decision if there were special circumstances. A benefits adviser can check the calculation with you.

How much can DWP take from your benefits?

The law allows higher Universal Credit deductions in some cases, such as overpayments linked to fraud, but DWP’s policy since April 2025 is to deduct at 15% of the standard allowance.

From older income-related benefits such as Pension Credit, the deduction is a fixed weekly amount set in regulations and reviewed each April, with a higher amount for fraud. From New Style JSA and ESA, it can be as much as 40% of the age-related amount.

If you are working, DWP can take the money from your wages instead, through a Direct Earnings Attachment. If you have stopped claiming, it will ask you to agree a repayment plan. DWP Debt Management explains both, including DWP’s new bank account and driving licence powers.

Can you get the deductions reduced or the debt written off?

Yes, in the right circumstances. DWP can:

• reduce the rate or pause recovery if repaying at the current rate causes you or your family hardship, on financial, health or welfare grounds. On Universal Credit this is called a “financial hardship decision”.
• waive (write off) the overpayment in exceptional circumstances, usually where recovery is causing serious financial or welfare problems. DWP looks at your finances and health, whether you actually benefited from the money, and how the overpayment happened. An overpayment caused by DWP’s mistake counts in your favour, but DWP says the cause alone is generally not enough.

Support your request with a budget showing your income and essential spending, bank statements, and a letter from a GP or support worker if the debt is affecting your health. National Debtline has a free sample letter for waiver requests. You cannot appeal a refusal to reduce or waive, but you can complain, and then go to the Independent Case Examiner. If the stress is affecting you, our guide to debt and your mental health covers the extra protections available.

Is a benefit overpayment a priority debt?

Citizens Advice lists benefit overpayments, apart from tax credits, as non-priority debts. DWP cannot evict you or cut off a supply. But it can take money from your benefits or wages without going to court, so an overpayment you ignore does not go away. Keep paying rent, council tax and energy first, then agree an affordable rate with DWP before it sets one for you.

Can a benefit overpayment go into an IVA, DRO or bankruptcy?

Yes, in England and Wales, with one big exception: overpayments classed as fraud are not written off by any of them. DWP’s guidance says:

• once you tell it about your IVA, DRO or bankruptcy, it stops recovering, whether or not its debt is included
• at the end, the included overpayment is written off, unless it is a fraud overpayment
• an overpayment decided after your DRO was approved cannot be added to it, although DWP will pause recovery until the DRO ends and then collect it
• a civil penalty added after your insolvency started is not covered
• Social Fund loans, such as Budgeting Loans, are not written off by an insolvency that started on or after 19 March 2012

Citizens Advice also lists benefit overpayments among the debts you can include in an IVA. If an overpayment is already being taken from your benefits, ask the insolvency practitioner how it will be treated before you sign. Our guide to what debts can go into an IVA has the full list.

If you are still challenging the overpayment, tell your adviser: a disputed debt can affect which solution is suitable, and the IVA Protocol lists disputed debts as a sign that a protocol IVA may not fit. A debt relief order is designed for people with low income and few assets: IVA or debt relief order? compares the two. A Breathing Space can pause recovery of non-fraud overpayments for up to 60 days while you get advice. IVAs are available in England, Wales and Northern Ireland; for Scotland, see debt solutions in Scotland.

What to do next

1. Check the decision letter for the benefit, period, amount and reason. If anything is unclear, ask for a written statement of reasons straight away.
2. If you think it is wrong, ask for a mandatory reconsideration within one month of the decision.
3. If you owe it, work out a budget and ask DWP for an affordable rate, or a hardship reduction if deductions are already too high.
4. Get free, impartial advice from MoneyHelper, StepChange, Citizens Advice or National Debtline, or a benefits adviser, especially if you owe other creditors too. See where to get free debt advice.

For other kinds of debt, see types of debt. If you use our checker, we may pass your details to a licensed insolvency practitioner or debt adviser.