News

570,000 people on Universal Credit are repaying tax credits overpayments

New government figures show that a quarter of claimants have had deductions from monthly payments, leaving them on the knife edge

EPA/Andy Rain

More than a quarter of the two million people claiming Universal Credit are having deductions taken from their monthly payments to cover tax credit overpayments.

Benefits payments have been slashed for 570,000 people who have moved on to the controversial system with an average debt of £610 while some are facing debts up to £1,560, according to government figures.

In order to recoup overpayment of the income-based credits, benefits chiefs can take away 15 per cent of payments or 25 per cent for people in work, amounting to around £47.67 for a single person over 25.

Half of the people we help while waiting for their initial payment are unable to keep up with bills or rent – so any deductions can push people over the edge

That was the reality for one in five claimants last month with 410,000 losing cash, which will continue until the debt is repaid. And claimants often only find out about the debt when they apply for Universal Credit.

Gillian Guy, chief executive of Citizens Advice, has warned the government that the debt collection could leave people living on an unsustainable amount.

“Deductions can be made to repay previous overpayment debts, but these can be from years ago and often come as a surprise,” she said. “They can also come on top of other deductions leaving some people unable to cover their essential costs.

“Our evidence shows that many people on Universal Credit are already struggling. Half of the people we help while waiting for their initial payment are unable to keep up with bills or rent – so any deductions can push people over the edge.”

The Department of Work and Pensions (DWP) has previously found that the debt came as a surprise to three-quarters of claimants with tax credit overpayments, who discovered that they had to pay back cash only when they claimed Universal Credit.

A third of those were experiencing financial difficulties, according to the survey, with more than half of that group reporting that their struggles came as they began claiming Universal Credit.

Shadow Work and Pensions Secretary Margaret Greenwood has warned that repayment can “push people into severe hardship” but the government has stressed that safeguards are in place.

A government spokesperson said: “Where an overpayment of Tax Credits is identified, we work to resolve the matter with the customer as quickly as possible.

“Safeguards are in place to ensure repayments are affordable and we have recently announced we will reduce the maximum amount that can be deducted from someone’s Universal Credit claim.”

Image: EPA/Andy Rain

Support the Big Issue

For over 30 years, the Big Issue has been committed to ending poverty in the UK. In 2024, our work is needed more than ever. Find out how you can support the Big Issue today.
Vendor martin Hawes

Recommended for you

View all
FOSO is the new FOMO: Why are we so afraid to switch off and be out of office?
Work

FOSO is the new FOMO: Why are we so afraid to switch off and be out of office?

Almost no recorded cases of disability benefit fraud despite DWP crackdown: 'PIP fraud is a non-issue'
dwp pip/ disabled person
Disability benefits

Almost no recorded cases of disability benefit fraud despite DWP crackdown: 'PIP fraud is a non-issue'

Deaf man awarded £50,000 after 'oppressive' and 'discriminatory' treatment by DWP
dwp jobcentre
Department for Work and Pensions

Deaf man awarded £50,000 after 'oppressive' and 'discriminatory' treatment by DWP

Green transition: Help retrain gas workers or risk 'cliff edge' job losses, government warned
Green transition

Green transition: Help retrain gas workers or risk 'cliff edge' job losses, government warned

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know
4.

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know