Avoiding Overpayments When Benefits Or Earnings Increase

Sometimes, an uprate in one benefit might mean a reduction in another benefit. For example, if you claim both Universal Credit (UC) and Industrial Injuries Disablement Benefit, an uprate in Industrial Injuries Disablement Benefit will mean a reduction in your UC payments.

A benefit uprate should mean that other impacted benefits are automatically reduced accordingly. However, in some cases, the automatic reduction isn’t made. If that happens, it means you’ll be paid more than you’re entitled to, and that could lead to an overpayment that you’ll have to pay back.

In one case, a claimant called Jim was in receipt of Industrial Injuries Disablement Benefit, as well as UC. He received a letter from the Benefits Office saying he had an overpayment resulting from an annual uprating of his Industrial Injuries Disablement Benefit which they were not notified about. UC entitlement is calculated automatically, and takes into account the claimant’s individual circumstances, including any other benefits they receive. To ensure accurate awards are calculated, UC relies on correct information being provided from a central Customer Information System. However, Industrial Injuries Disablement Benefit requires manual intervention to update claims, and UC had missed the uprated benefit information. As a result, the change was not captured. And, because all UC overpayments are recoverable, even if they’re system errors and not the fault of the claimant, Jim ended up being responsible for the overpayment and had to pay it back.

Overpayments can also occur when people in receipt of UC have an increase in earnings that aren’t taken into consideration. This April, the National Minimum Wage will rise to £12.21 per hour for those aged 21 and over, and £10 per hour for those aged 18 to 21. The Real Living Wage has also gone up this year to £12.60. Such increases will mean a reduction in your UC payments. A claimant who fails to report any increase in earnings could be paid more UC than they’re entitled to, and that will lead to an overpayment.

In a third scenario, overpayments can come about where someone has earnings and is also in receipt of Carers Allowance. Any increase in those earnings will affect the amount of Carers Allowance they’re entitled to, and not reporting the change in earnings can result in an overpayment.

To avoid potential overpayments resulting from an uprate in benefits or an increase in earnings, claimants can’t assume that their Benefits Office will be aware of these changes in their circumstances. The Benefits Office may not realise the claimant has had a benefit uprate or an earnings’ increase, and they could be paying more than the claimant is entitled to.

UC claimants should contact their Benefits Office right away to report any uprating or increase they’ve received. Claimants can contact their Benefits Office by visiting the Office in-person, ringing the UC line 0800-012-1331, or contacting their work coach via the UC Journal. If the Benefits Office fail to act on this information, there may still be an overpayment. And unfortunately, all UC overpayments are recoverable, even if they’re not the claimant’s fault, and are because of an error or failure to act on the part of the Benefits Office.

If a claimant ends up with an overpayment their best course of action is to seek independent advice, where they can get advice on the options available. It’s possible to have the overpayment waived or ‘written off’, or at the very least, get support to negotiate more affordable repayments. If an overpayment occurs even after a claimant reports a change that the Benefits Office didn’t act on, it will strengthen their case if they look for an overpayment 'waiver' or 'write-off'.

In general, to avoid overpayments, claimants should report any and all changes in their income as soon as they’re aware of them, including reporting any unexpected or duplicate payments. It’s also important to carefully read letters and leaflets from the Benefits Office, and check that personal details are correctly recorded.

But the rule of thumb is, when in doubt, contact your Benefits Office or seek independent advice.

Freephone: 0800 915 4604

Or find your local advice centre at www.adviceni.net/local-advice.