DWP Overpaid Benefits by Mistake: What to Do Next?

Receiving benefits from the Department for Work and Pensions (DWP) can be crucial for financial stability.

However, errors sometimes occur, leading to overpayments. If you’ve received more money than you were entitled to, you may be wondering:

• Do I have to repay the overpayment?
• What if it wasn’t my fault?
• How can I challenge the decision?

This guide explains what to do if DWP overpaid benefits by mistake, when repayments are required, and how to handle disputes or financial hardship.

What Is a DWP Overpayment?

A DWP overpayment happens when the Department for Work and Pensions (DWP) pays more benefit money than you are entitled to receive.

This can occur due to errors, delays, or incorrect information related to your claim.

The DWP is responsible for processing payments for benefits like Universal Credit, Housing Benefit, Personal Independence Payment (PIP), Jobseeker’s Allowance (JSA), Employment and Support Allowance (ESA), and Pension Credit.

Common Reasons for DWP Overpayments

Overpayments can happen for a variety of reasons, including:

DWP Administrative Errors

• Mistakes made by the DWP when processing claims or adjusting payments.
• Example: The DWP miscalculates your entitlement and pays more than it should.

Failure to Report Changes in Circumstances

• You are required to report any changes in your financial, employment, or personal situation to the DWP.
• Example: If you start working but fail to report it, the DWP may continue paying you the same amount of Universal Credit as if you were unemployed.

Delays in Processing Updates

• Sometimes, you may report a change, but the DWP takes weeks or months to update your records, resulting in an overpayment.
• Example: You inform the DWP that your rent has decreased, but they continue paying you the old higher amount of Housing Benefit.

Incorrect Information on a Claim

• If you mistakenly enter incorrect details when applying for benefits, it can lead to an overpayment.
• Example: You mistakenly report lower earnings than you actually receive, and the DWP calculates your benefits based on false income data.

Fraudulent Overpayments

• If the DWP believes that you intentionally provided false information to receive extra benefits, it could be considered fraud.
• In such cases, you may face legal action, penalties, or even prosecution.
• Even if the overpayment is due to a DWP mistake, they may still ask you to repay the money unless you can prove that you were unaware of the error.

How Does the DWP Handle Benefit Overpayments?

The DWP follows a structured process when dealing with benefit overpayments. Here’s what happens when they identify an overpayment:

You Receive a Notification Letter

If the DWP believes you’ve been overpaid, they will send you an official overpayment notification letter. This letter will explain:

• The amount you have been overpaid.
• The reason for the overpayment.
• Repayment options and how the money will be recovered.
• Your right to appeal the decision if you believe it is incorrect.

Automatic Deductions (If You Still Receive Benefits)

If you continue receiving benefits, the DWP may automatically deduct the overpaid amount from your future payments.

• The deduction is usually between 15% and 25% of your standard benefit payment.
• If the overpayment is due to fraud, deductions may be higher.

Debt Recovery Process (If You No Longer Receive Benefits)

If you are no longer on benefits, you will receive a separate letter from DWP Debt Management explaining how to repay the overpayment. You can:

• Repay the full amount at once.
• Set up a repayment plan with monthly instalments.

If you ignore the letters and fail to make arrangements, the DWP may:

• Pass the debt to a private debt collection agency.
• Deduct repayments from your wages through your employer.
• Take legal action, which could result in a County Court Judgment (CCJ).

Special Cases: Housing Benefit Overpayments

• If the Housing Benefit was overpaid and paid directly to your landlord, the landlord may be asked to repay the amount.
• If the overpayment was your fault, you may still be held responsible for repaying it.

Special Cases: Overpayments Due to Death

If a person receiving benefits dies and has been overpaid, the DWP may:

• Recover the debt from their estate before assets are distributed.
• Write to the executor or administrator handling the deceased person’s finances.

Failure to settle the debt before distributing assets may result in the executor being personally liable for the overpayment.

Do You Have to Repay Overpaid Benefits?

The DWP typically requires repayment, but there are exceptions.

When You Must Repay Overpayments?

• If you failed to report a change in circumstances.
• If you provided incorrect information on your claim.
• If you continued receiving payments after you were no longer eligible.
• If the overpayment was caused by suspected fraud.

When You May NOT Have to Repay?

In some cases, you might not have to repay an overpayment:

• If the overpayment was caused by a DWP error and you could not have reasonably known about the mistake.
• If repaying the money would cause severe financial hardship.

How to Request a Repayment Review?

• If you believe you should not be required to repay, you can challenge the decision (see next section).
• You can also request a lower repayment rate if the deductions are causing financial difficulty.

How Can You Challenge a DWP Overpayment Claim?

If you disagree with the overpayment or believe you should not have to repay, you can challenge the decision through the Mandatory Reconsideration process.

Step 1: Request a Mandatory Reconsideration

• This must be done within one month of receiving the overpayment letter.
• You can request it by phone, letter, or through your online benefits account.
• Explain why you think the decision is wrong and provide evidence to support your case (e.g., bank statements, payslips, proof of reported changes).

Step 2: Appeal to a Tribunal (If Reconsideration Is Unsuccessful)

• If the Mandatory Reconsideration is rejected, you can appeal to an independent tribunal.
• The tribunal will review your case and decide whether the overpayment should be repaid.

Step 3: Seek Legal Advice

• Citizens Advice and other legal aid organisations can assist you in the appeal process.
• If you cannot afford legal fees, you may qualify for free legal assistance.

Important: Avoid Ignoring the Overpayment

• If you do not challenge the decision within the given timeframe, the DWP will assume you accept the overpayment and begin recovery actions.
• If you miss the appeal deadline, you may still request a review, but you must provide a valid reason for the delay.

What If You’ve Been Overpaid by Universal Credit?

If you receive Universal Credit and suspect you have been overpaid, it is your responsibility to report it immediately. The DWP may still reclaim the money even if the overpayment was their mistake.

How to Report a Universal Credit Overpayment?

You can report an overpayment by:

• Signing into your Universal Credit account and sending a message to your work coach.
• Calling the Universal Credit helpline at:
  • Telephone: 0800 328 5644
  • Welsh Language: 0800 328 1744
  • Textphone: 0800 328 1344
  • Relay UK (for those with hearing/speech impairments): 18001 then 0800 328 5644

What Happens After You Report an Overpayment?

Once you notify the DWP, they will:

1. Review your case to confirm whether an overpayment occurred.
2. Send you a letter explaining the overpayment details and repayment options.
3. Adjust your future payments if you still receive Universal Credit.

If you believe the overpayment is incorrect, you can challenge the decision (see the section on appealing an overpayment).

When Will the DWP Contact You About Overpayments?

How Does the DWP Notify You of an Overpayment?

If the DWP identifies an overpayment, they will contact you through:

• A letter sent to your address
• A message on your Universal Credit account
• A phone call from a DWP representative

The overpayment notification letter will include:

• The amount you were overpaid
• The reason for the overpayment
• How the DWP intends to recover the money
• Your right to request a Mandatory Reconsideration

What Should You Do When You Receive an Overpayment Letter?

• Check the details carefully – Make sure the amount and reason match your records.
• Contact the DWP if you think it’s incorrect – You can dispute it through a Mandatory Reconsideration.
• Do not ignore the letter – The DWP can take further action if you fail to respond.

Housing Benefit Overpayments

• If the Housing Benefit is overpaid and paid directly to your landlord, the landlord may be responsible for repaying the overpayment.
• However, if the overpayment was your fault, you may still need to repay it.

What Can You Do If You Can’t Afford to Repay?

If repaying the DWP overpayment would cause financial hardship, there are several options available:

Request a Lower Repayment Rate

If you are still receiving benefits, the DWP usually deducts between 15% and 25% from your payments. However, you can request a lower deduction rate if the repayments:

• Leave you unable to afford essential living costs (food, rent, bills).
• Cause severe financial distress.

How to Apply:

• Contact DWP Debt Management at 0800 916 0647 to request a lower rate.
• Provide evidence of financial hardship (bank statements, rent/mortgage statements, utility bills).

Apply for a Financial Hardship Exemption

In extreme cases, you can apply for a temporary suspension or reduction in repayments. The DWP assesses hardship on a case-by-case basis.

Seek Debt Advice

If you’re struggling with multiple debts, contact:

• Citizens Advice – Offers free financial guidance.
• StepChange Debt Charity – Helps negotiate repayment plans.
• National Debtline – Provides legal and financial advice on debt issues.

Set Up a Repayment Plan

If you no longer receive benefits, you can arrange affordable monthly payments with the DWP. Contact DWP Debt Management to discuss payment options.

Avoid Ignoring the Debt

If you fail to engage with the DWP, they may:

• Deduct repayments directly from your wages through your employer.
• Refer the debt to a private debt collection agency.
• Take legal action, which could result in a County Court Judgment (CCJ).

How to Make a Repayment?

The repayment process depends on your situation:

If You Still Receive Benefits

The DWP will automatically deduct repayments from your benefits. The standard deduction is between 15% and 25% of your Universal Credit or other benefits.

• If the deduction is too high, you can request a lower rate by calling DWP Debt Management (0800 916 0647).

If You No Longer Receive Benefits

• The DWP will send a letter with instructions on how to repay in full or set up a repayment plan.
• You can make payments by:
  • Direct debit
  • Bank transfer
  • Phone payment

If Your Case is Sent to a Debt Collector

If you do not repay, the DWP may pass your case to a debt collection agency, such as:

• Advantis
• BPO Collections
• CCS Collect
• Moorcroft
• Past Due Credit
• Resolve Call

You must deal directly with the debt collector to arrange a repayment plan.

If Your Case is Sent to the DWP Debt Enforcement Team

If you continue to ignore the debt, the DWP Debt Enforcement Team may take legal action, which can result in:

• A County Court Judgment (CCJ)
• Court-ordered deductions from your wages or bank account
• Additional court costs added to your debt

If a CCJ is issued, your credit score will be negatively affected for up to six years.

What Happens If Someone Dies and Has an Overpayment?

If a deceased person was overpaid benefits, the DWP has the legal right to recover the debt from their estate.

Who Handles the Overpayment?

• The executor or administrator of the estate is responsible for repaying the overpayment from the deceased person’s assets.
• If no executor was named, the DWP will contact the next of kin.

What the Executor Needs to Do?

1. Wait for the DWP’s letter before distributing the estate.
2. Gather financial documents such as bank statements and proof of assets.
3. Calculate the estate’s total value, including savings, property, and pensions.

Warning: If the estate is distributed before repaying the DWP, the executor may become personally liable for the overpayment.

How the DWP Recovers the Overpayment?

• The DWP will send a letter explaining how the overpayment was calculated.
• The estate’s executor can contact the DWP’s Debt Management Recovery from Estates for payment details.

In England and Wales, contact:

Debt Management (RE)
Mail Handling Site A
Wolverhampton
WV98 2DG

In Scotland, contact:

Debt Management (RES)
Mail Handling Site A
Wolverhampton
WV98 2DH

If the estate has insufficient funds, the debt may be written off. However, if funds are available, the overpayment must be repaid before distributing the estate.

Conclusion

If the DWP overpaid benefits by mistake, it is important to act quickly to understand your options.

Review the overpayment details, check whether repayment is required, and, if necessary, challenge the decision through a Mandatory Reconsideration.

If repaying the money causes financial hardship, you can request a lower repayment rate or explore alternative repayment plans.

Ignoring the debt can lead to legal action, wage deductions, or court enforcement, so it’s best to address the issue as soon as possible.

For more information about DWP overpayments, Universal Credit, and other UK benefits, visit Universal Credit News to stay updated with the latest government policies, benefit changes, and expert advice.

FAQs

Can the DWP take money from my bank account for overpayments?

No, but they can deduct repayments from benefits, wages, or involve debt collectors.

What happens if I ignore a DWP overpayment letter?

It may result in legal action, wage deductions, or court judgments.

How long do I have to appeal an overpayment decision?

You have one month to request a Mandatory Reconsideration.

Will an overpayment affect my credit score?

Not unless the debt is referred to court or a debt collector.

Can an overpayment be written off?

In extreme cases, the DWP may waive the debt if repayment causes severe hardship.