Benefit overpayments

A benefit overpayment is money you were paid but were not entitled to. The DWP can usually recover it by taking money from your ongoing benefits or, if you work, from your wages, without going to court. Overpayments from Social Security Scotland follow different, Scottish rules. Whoever made the mistake, you can challenge the decision, ask to pay back less, and get free advice.

Is a benefit overpayment a priority debt?

Advice services do not all agree. Citizens Advice Scotland lists most benefit overpayments as non-priority debts (tax credit overpayments are the main exception), because not paying one does not put your home, your energy supply or your liberty at risk. But it is worth dealing with early, because the DWP has ways to collect it that most creditors do not. GOV.UK says that if you are still on benefits, your regular payment will be reduced until the overpayment is repaid. If you are no longer on benefits and do not repay or get in touch, DWP Debt Management may:

• ask your employer to take deductions from your pay (a direct earnings attachment)
• pass your case to a debt collection agency
• pass your case to its Debt Enforcement Team, which can take court action

From 24 June 2026, new powers also let the DWP, in some cases, take money directly from the bank account of someone who is not on benefits, not in PAYE work and has not agreed to repay. The DWP says enforcement will be rolled out gradually from October 2026, after affordability and vulnerability checks.

Benefit overpayments also last longer than most debts. DWP benefit and tax credit overpayments are among the debts the five-year prescription rule does not apply to, so the 20-year period applies instead. See statute-barred debt in Scotland.

When do you have to pay a DWP overpayment back?

It depends on the benefit.

• Universal Credit, and new style Jobseeker’s Allowance and Employment and Support Allowance: the DWP’s recovery guide says all overpayments are recoverable, even if the DWP made the mistake.
• Older benefits, such as Pension Credit, Carer’s Allowance or income-related ESA: an overpayment is generally recoverable where it happened because someone gave wrong information or did not report a change. That includes innocent mistakes as well as deliberate ones.
• Housing Benefit: overpayments are recovered by your council.
• Tax credits and Child Benefit: there is a different process.

How can you challenge an overpayment decision?

You can ask the DWP for a written statement of reasons explaining the decision, or ask it to look at the decision again. This is called a mandatory reconsideration, and you usually need to ask within one month of the decision letter. It is worth asking if:

• you think the DWP got the facts or the amount wrong
• you did tell it about a change, and can show when
• it missed evidence you gave it

If the decision does not change, you can appeal to an independent tribunal, usually within one month of the reconsideration decision. For most benefits, recovery is paused while a reconsideration or appeal is under way. For Universal Credit, the DWP’s guide says recovery carries on while you challenge, so ask for lower deductions at the same time if you need to.

Can you pay back less, or have it written off?

Asking for lower deductions

GOV.UK says the most that can normally be taken from your Universal Credit to repay debts is 15% of your standard allowance in total (down from 25% since 30 April 2025). Some last resort deductions, which help you pay child maintenance or avoid eviction or having your utilities cut off, can take the total above that. If you are struggling, you can ask for a financial hardship decision to reduce what you pay towards benefit debts. Ask through your Universal Credit journal, or call DWP Debt Management on 0800 916 0647 (Monday to Friday, 8am to 7.30pm).

The DWP’s guide says a direct earnings attachment is meant for people who will not agree a repayment plan, not for people who cannot pay. If you cannot afford what is being taken, tell the DWP and explain your budget.

Asking for a waiver

The DWP can decide not to recover all or part of an overpayment. Its guide says waivers are only granted in exceptional circumstances, and a request should normally be made in writing. Things it may take into account include:

• your household’s financial circumstances
• whether recovery is affecting your health or your family’s health
• whether you relied on official advice given in good faith
• whether you could reasonably have known you were being overpaid
• whether there was any misrepresentation or fraud

An adviser can help you set out your reasons and evidence.

What about Social Security Scotland overpayments?

Scottish benefits, such as Adult Disability Payment, Child Disability Payment and Scottish Child Payment, are paid by Social Security Scotland under different law.

• You may not have to pay it back. Under section 64 of the Social Security (Scotland) Act 2018, you are not liable if the mistake was not your fault and was not the kind of mistake you could reasonably be expected to notice.
• Your circumstances count. When deciding whether and how to recover money, the Scottish Ministers must have regard to your financial circumstances (section 65).
• Paying back. mygov.scot says you can ask to repay over a longer period if you are in financial difficulty. Call 0800 001 4542.
• Challenging it. If money is to be taken from your ongoing payments, you can ask for a re-determination. mygov.scot says you usually have 31 days, or 42 days for some disability and carer benefits. If you still disagree, you can appeal to the First-tier Tribunal.

How are overpayments treated in trust deeds and sequestration?

The DWP’s recovery guide (updated 28 May 2025) sets out its policy for Scotland. In short:

Fraud is different. Debts arising from fraud are not discharged at the end of a sequestration (Bankruptcy (Scotland) Act 2016, section 145(3)), and the same exclusion carries over to trust deeds. Overpayments classed as fraud, for example after a conviction or an administrative penalty, can still be recovered afterwards.

For Housing Benefit, the DWP’s guidance for councils says an overpayment decided before a trust deed was granted can only be recovered during it by deductions from ongoing benefit, and the rest is written off on discharge, except fraud. See which debts can go into a trust deed and trust deeds and benefits.

We could not find official guidance on how Social Security Scotland overpayments are treated in a trust deed or sequestration, so ask the adviser to check.

Nothing is written off unless the trust deed or sequestration runs its course and you are discharged. A trust deed has fees, affects your credit rating for 6 years and is listed on the public Register of Insolvencies, and if it fails, creditors can pursue you again. It is only one of the options an adviser will look at, alongside sequestration, DAS and simply agreeing an affordable repayment rate.

Official sources

• GOV.UK: benefit overpayments
• DWP: benefit overpayment recovery guide
• GOV.UK: money taken off your Universal Credit payment
• Social Security (Scotland) Act 2018, section 64: exclusion from liability
• mygov.scot: Social Security Scotland benefit overpayments