Overpaid Universal Credit? What happens, how to repay and your rights
If the Department for Work and Pensions (DWP) says you’ve been paid too much Universal Credit, you’ll usually be asked to pay the money back. But you still have options. You can challenge the decision, ask to repay it in a way you can manage, and in some cases, the debt can be reduced or written off. This guide explains why these overpayments happen, what to do if one affects you, and the help available when it comes to paying it back.
Why you might be overpaid Universal Credit
If you’re paid too much Universal Credit, you’ll usually have to pay it back – so it’s important to act quickly if you think there’s been a mistake.
Overpayments can occur for a variety of reasons, including:
You gave incorrect information. For example, you got your income from self-employment wrong, or forgot to include another source of money - for example, a savings account.
You didn't tell the DWP about a change in your circumstances that means you should get less Universal Credit or none at all. For example, if you moved in with a partner or your child moved out of your home.
It's because of an official error. This is when the DWP makes a mistake – for example, if you reported a change in your circumstances but it wasn’t updated, or you were given incorrect advice when filling in a form.
For some benefits, including Carer's Allowance and Personal Independence Payment, overpayments due to official error don't need to be repaid.
This isn't the case with Universal Credit. Whatever the reason for the overpayment, it's likely you'll need to repay the full amount if it's over £65.01 – so it's important you understand what changes to report to avoid an overpayment in the first place and what your rights are if an overpayment does happen.
If you think you've been overpaid Universal Credit but haven’t heard anything from the Department for Work and Pensions (DWP), let them know as soon as possible. In most cases ANY overpayment of Universal Credit will need to be repaid, even if it’s not your fault. So the sooner you raise it, the smaller the amount you might need to repay is likely to be.
You get to keep the overpayment if it's £65.01 or less
You'll need to repay any amount of Universal Credit paid to you which you weren't entitled to above £65.01. Anything under this amount, known as the 'small overpayments limit' (SMOP), you get to keep as it's deemed too small and not cost-effective for the DWP to recover.
There's a few instances where the SMOP doesn't apply. These include...
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Overpayments that are the result of fraud - for example you deliberately told the DWP you were single when you were living with a partner in order to get more Universal Credit.
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If there are multiple cases of overpayment, they will be added together. If this bring the value over £65.01, it will need to be repaid.
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If the DWP aren't notified of a death in time before a payment is made - known as a direct payment after death (DPAD) - the SMOP limit is reduced to £25.
What happens if I've been overpaid Universal Credit?
If your overpayment is £65 or less, you won't usually need to pay it back.
This is known as the 'small overpayments limit' (SMOP), which means it's deemed too small and not cost-effective for the DWP to recover (although there are some exceptions).
That means if your overpayment is £65.01 or more, you'll need to repay it (even if it wasn't your fault). The process will depend on whether you or the DWP notice the overpayment.
You might be worried about being taken to court or prosecuted for overpayments but, in reality, prosecution and big fines are rare – and only apply to cases of intentional or organised fraud.
If you notice an overpayment
If you notice you've been paid more money for your Universal Credit than you usually are, you should flag this to the DWP as soon as possible. If it's an overpayment, flagging it early means less money to pay back.
You can notify the DWP of a possible overpayment by:
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Signing into your Universal Credit account
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Calling the Universal Credit helpline on 0800 328 5644 (or 0800 328 1744 for a Welsh language line)
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Relay UK is available if you cannot hear or speak on the phone. Call 18001 then 0800 328 5644
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For a British Sign Language service, you can use video relay.
If the DWP notices an overpayment
If the DWP spots that you've been overpaid Universal Credit, you'll receive a letter via post or in your online journal titled ‘You have been paid more Universal Credit than you are entitled to. This will now be taken back.’
The letter should tell you how much the DWP believes you've been overpaid and why. If you aren't told the reasons why they think you've been overpaid, you can ask the DWP to provide the ‘full written reasons’ for the overpayment – this could help you challenge anything you think might be wrong.
If the DWP tells you over the phone that you’ve been overpaid, ask it to write to you with a decision letter.
In either case, you'll be able to ask for more information and challenge the decision or payment plan.
Will I be fined for an overpayment?
You won't be fined or made to repay anything more than the amount you were overpaid if an overpayment was found to be the fault of the DWP, a benefits advisor, or third party.
However, if the overpayment happened because:
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You negligently made an incorrect statement and failed to take reasonable steps to correct the error
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You failed to disclose information about your claim without a reasonable excuse
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You failed to inform DWP of a relevant change of circumstances without a reasonable excuse.
You'll likely receive a £50 civil penalty. This will be added to the overpayment amount and repaid in the same way – you won't be asked to pay it upfront. This is NOT a criminal charge.
You can appeal a civil penalty if you think you've taken reasonable steps to correct the error which led to you being overpaid, or if you believe the error was the fault of the DWP, your benefits advisor or a third party. See how you can challenge a decision.
In very limited circumstances, where there is clear evidence of criminality and benefit fraud, you may be prosecuted OR offered an administrative penalty (Ad Pen) as an alternative to prosecution. If you accept an Ad Pen, you do so without admission of fraud and agree to pay 50% of the amount overpaid or £350, whichever is higher, with a maximum penalty of £5,000. If you accept an Ad Pen, there is a 14-day 'cooling off' period in which you can change your mind.
If you have been offered an Ad Pen or told you will be prosecuted, you should seek expert advice. The government has information on how to find a legal advisor who can deal with benefits-related issues.
You may be able to challenge the decision
The idea of repaying what might be a large sum of money can be daunting and – depending on the amount – you might feel that it'll impact your quality of life. There are ways to challenge the overpayment itself, or the plan for repayment.
Crucially, no repayment plan should leave you unable to get by. The DWP must consider whether any repayment agreement would cause you undue financial hardship – which essentially means the repayments can’t affect your ability to pay for necessary things such as rent, bills, or groceries – and are able to adjust payment plans to prevent this.
You have the right to challenge:
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The overpayment itself – if you think you weren't overpaid at all
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The overpayment amount – for example, if you think it’s been calculated wrong, or if you believe you're actually entitled to the additional Universal Credit.
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The reason for the overpayment – you might want to challenge this if you were given a £50 civil penalty because the DWP said the overpayment was your fault, but you think it was the DWP's, for example.
Remember, you need to act quickly if you want to challenge an overpayment as there are time limits.
How to challenge an overpayment
Below is the step-by-step process to follow if you want to challenge an overpayment:
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Step 1: Request a 'Written statement of reasons'. If you haven't already been given these details from the DWP, you can ask for them. Make sure you do this as soon as possible - understanding why the DWP thinks you've overpaid will help you assess whether you think it's correct or whether you might be able to challenge it.
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Step 2: Request a mandatory reconsideration. If you think the overpayment assessment is wrong (eg, you think the amount is incorrect or the reason isn't right), you can request a mandatory reconsideration of the decision. You'll usually need to do this within 30 days of being told of the overpayment. If you request this, someone will look at your whole benefit claim again.
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Step 3: Escalate to the first-tier tribunal. If you disagree with the decision of the mandatory reconsideration, you can appeal it. You will need to do this within 30 days of receiving the mandatory reconsideration decision and can do this either online or by post.
If you need help challenging an overpayment, you can appoint someone as your representative.
Important: The DWP should not take any money from you until your mandatory reconsideration or appeal has been decided. If they do, you can make a complaint.
You can request up to 60 days protection from overpayments using the Government's Breathing Space scheme. During this time the DWP will have to pause repayments and stop contacting you about the overpayment.
There are two types of Breathing Space:
Standard Breathing Space. This is available to anyone with problem debt, including a Universal Credit overpayment.
Mental Health Crisis Breathing Space. This is available to anyone receiving mental health crisis treatment and has some stronger protections. It lasts as long as your mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).
Using this scheme can give you valuable to time assess the overpayment, understand your options, and begin to prepare for any benefit deductions. It is especially helpful for Universal Credit overpayments as the DWP will typically start to deduct repayments as soon as an overpayment is discovered.
You aren't able to use Breathing Space if your overpayments are found to be a result of fraud.
In some circumstances, you might be able to have the overpayment waived
The DWP has a power called it’s ‘discretion not to recover’ an overpayment. This is where they can waive all or part of the overpayment debt. The power is not used very often and you need to have a very good reason for it to be applied, but it’s worth a try if it applies to you.
To ask for a waiver of the overpayment, you'll need to send a formal letter to the DWP's Debt Management Service, including any supporting evidence. This evidence might include:
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Bank statements showing you will struggle financially if repayments are made
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Evidence that the debt is impacting you or your family's health
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Details of any action you took to mitigate the overpayment, for example if you tried to contact or notify the DWP of a change to your circumstances or told it you think you were overpaid, but they didn't respond
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Any evidence to support that your action or inaction was based on advice from the DWP or a benefits advisor. For example, screenshots of incorrect advice you were given in your online journal
National Debtline has a helpful draft letter you can use. Clearly mark the envelope 'Waiver Request' and send it to: Debt Management (C), Mail Handling Site A, Wolverhampton, WV98 2DF.
If you need more information on this process, you can contact Debt Management on 0800 916 0647 (Textphone 0800 916 0651).
What happens if you do need to repay?
The way you'll repay depends on whether you're still receiving benefits or not.
If you're still receiving benefits:
If you're still getting benefits, in most cases the repayments will be taken from your Universal Credit Standard Allowance.
The DWP is allowed to deduct a maximum of 40% of your Standard Allowance to repay an overpayment, but this level of deduction is rare. The typical approach is to limit deductions to the following percentages of the Standard Allowance:
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25% if the overpayment was the result of fraud
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25% for non-fraud cases, but your Universal Credit was reduced because you were earning income from work
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15% in all other cases
You'll have your Standard Allowance deducted until you've paid back the full overpayment amount. You should see the repayments appear as 'recovery of an overpayment' under the deductions section of your Universal Credit statement on your online journal, or on statements sent to you by post.
You can use this online repayment portal to track how much you owe, your payment history, and get help and support. You can also use the service to pay back what you owe in full or make a one-off payment towards the money owed.
Important: The DWP will start taking money out of your benefits to repay any overpayments pretty much immediately. If you need time to think and assess your situation you can ask for up to 60 days of breathing space. If you decide to challenge an overpayment decision, the DWP will pause your repayments until there is an outcome.
Repaying if you're no longer receiving benefits:
If you're no longer getting benefits, you can repay the money either in a lump sum, or by setting up a payment plan with the DWP.
After you've been told about the overpayment and reason, you'll get a letter from the DWP providing you with details to sign in to their online repayment portal. You can use this service to set up or manage a payment plan. You can also do this by calling them on 0800 916 0647.
A payment plan might look like:
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Setting up a direct debit each month to repay the amount in manageable instalments.
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Splitting the overpayment into three lump sums and repaying by bank transfer across a set period.
Negotiating a repayment plan with the DWP
Whether you're still on Universal Credit or are no longer receiving benefits, you have the right to negotiate an affordable repayment plan with the DWP by calling them on 0800 916 0647 or via their online repayment portal. If you need help doing this, you can appoint someone as your representative.
Before you negotiate with the DWP, it's a good idea to gather together information on your current finances, including your income and outgoings. This will help you understand what level of repayment is affordable for you and put you in a better position for your conversation with the DWP.
Be aware you may still have repayments taken from your Universal Credit allowance at the standard 15% rate before the repayment plan you negotiate comes into force. If this isn't something you can afford, think about applying for Breathing Space as soon as you get news of the overpayment.
Example of how repayment could work
A single, unemployed adult with a two-year-old child living in a private rental property, could get monthly:
£424.90 in Standard Allowance
£303.94 in Child Element
£500.00 in Housing Element
If over time their savings increased over the £6,000 lower threshold and they should have received less Universal Credit but didn't, they could be overpaid by £250, for example.
Because this is over the small overpayments limit (SMOP), they'd need to repay in full even if it wasn't their fault. There are a few ways this might happen depending on their circumstances:
They're still on Universal Credit and the overpayment was because they forgot to report changes to their savings.
As the overpayment was an accident, they'd lose a maximum of 15% of their Standard Allowance. They'd probably get a £50 civil penalty because – although not on purpose – the overpayment will be seen as their fault. Repayment might look like their standard allowance being reduced to £361.20 for about five months as they repay the £300 total (£250 + £50). Their Child and Housing Elements wouldn't change. They'd be asked to organise a repayment plan if not still on Universal Credit.They're still on Universal Credit and the overpayment was because the DWP didn't log changes they reported. They'd lose a maximum of 15% of their Standard Allowance. They won't get a civil penalty because the overpayment wasn't their fault. So their Standard Allowance would be reduced to £361.20 for about four months.
They intentionally hid the extra savings because they knew it would impact their Universal Credit allowance. If the DWP can prove there was intentional fraud, they might have their Standard Allowance reduced up to 25%. They could be prosecuted, but they'd more likely be offered an Administrative Penalty (AdPen). Repayments might look like their Standard Allowance dropping to £318.68 for around five and a half months until the £600 is repaid (£250 + £350 AdPen).
If you don't respond to the DWP or refuse to pay, things can escalate
In most cases, overpayments will be repaid via deductions to your Universal Credit allowance (if you're on the benefit) or by negotiating a direct debit payment plan with the DWP (if you're no longer getting Universal Credit). But, if you refuse to repay or engage with the DWP to negotiate a payment plan, they have other powers to get the overpayment back:
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Taking money directly from your wages/salary. The DWP can ask your employer to take money from your pay before it is paid to you if you work for an employer with at least 10 employees. This is known as a ‘direct earnings attachment’ (DEA).
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Taking money directly from your bank account. In 2025, the DWP was given new powers to take money direct from a person's bank account to pay back money owed. This is known as a 'direct deduction order' (DDO). A DDO might be used for a person who is not receiving benefits or earning money through PAYE (so a DEA cannot be used), BUT the first port of call for the DWP will still be a payment plan.
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Debt collection agency. The DWP might pass your case to an independent debt collector if you don't pay back the money you owe. If this happens, you should get a letter from the agency.
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Court. If your case is passed to the DWP's Debt Enforcement Team it could end up trying to reclaim any money owed through the Courts.
If you're challenging your overpayment by mandatory reconsideration or tribunal, the DWP will stop repayments until a decision is made - this doesn't count as not engaging with them. Remember, if you need some time to process the overpayment at any point, you can ask for up to 60 days of Breathing Space.
Overpayment FAQs
Will my benefit stop if I have been overpaid?
This is a common concern, but in reality your UC is very unlikely to stop - especially if the overpayment was an accident or not your fault.
There are a few circumstances in which your UC might be stopped, however:
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If the overpayment was the result of fraud, your UC might stop while an investigation takes place.
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If you refuse to give additional information to the DWP about the overpayment if they request it your UC may be stopped.
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If the overpayment was made because of an unreported change in your circumstances that means you're no longer eligible for UC, your UC will be stopped if you're still not eligible and you'll have to repay by payment plan.
I have a large overpayment - do I need to seek legal advice?
In general, you won't need legal advice to deal with an overpayment even if the overpayment was quite large - as you'll typically repay it in the ways we describe above. But it's your choice, and you can seek legal advice if you think it's right for you.
If the DWP are accusing you of fraud or if you're being prosecuted because you've been found guilty of fraud it's recommended that you seek legal advice. The government has information on how to find a legal advisor who can deal with benefits-related issues.
[speaking to DWP]
How do repayments work when the claimant has died?
If a UC overpayment was paid to someone who has now passed away, the DWP will first try to get the overpayment back from the bank where the money was paid. If they can't do this, they will go to the person's representative or next of kin for repayment - although the money is expected to come from the deceased person's estate (eg, any savings they left) not from the representative or next of kin's own money.
If the overpayment was part of a UC claim for a couple, then the surviving partner will be responsible for repayment.
My housing benefit is paid directly to my landlord. What happens in the case of an overpayment?
What happens in this case will depend on the reason for the overpayment:
Reason for the overpayment | Who can the overpayment be recovered from |
|---|---|
Change of address | Landlord or claimant [examples] |
Misrepresentation or failure to disclose information that would impact UC entitlement | Whoever misrepresented or didn't disclose the information. For example, the landlord will be responsible |
More UC paid to landlord than the value of the rent (not for either of the above reasons) | Landlord |
Any other reason | Claimant |
If your landlord is responsible for the overpayment has to treat you as if you have paid all money owed.
If you're responsible, and overpaid is above the SMOP (small overpayments limit) of £65.01, then you'll likely repay through deductions to your standard allowance if you're still on Universal Credit and NOT through any deduction to your housing allowance - so your rent will still be paid.
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What happens to my repayments after bankruptcy or a debt relief order?
You are able to include UC overpayments within a bankruptcy or debt relief order (DRO). If this happens, the debt will be forgiven.
If your bankruptcy or DRO doesn't include your UC overpayment, the DWP won't seek repayment during your insolvency period - though you should let them know so they don't continue to take repayments.
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