MORE than half a million people who receive Universal Credit or other benefits have had their payments slashed in a tax raid.
This has left struggling families on low incomes relying on food banks, or losing chunks of much-needed cash each month because of back office blunders, The Times has reported.
The reduction in benefits is due to mistakenly overpaid tax credits that could have happened up to 17 years ago and which many people would have known nothing about.
Often, the overpayments are a result of clerical errors or because people gave incorrect information or didn't inform DWP of a change in circumstance.
HMRC granted struggling families a break from these repayments when the first lockdown began in March last year, but this lasted just four months.
Now, new figures obtained by the Times found that 47,000 universal credit claimants per week have had payments cut since January 18.
The same Freedom of Information Request showed that £63 million was deducted from from accounts between April and November last year.
The newspaper also reported that those who have been having their payments docked include carers and frontline workers.
It said that only 1% of credit overpayment debts are for penalties and interest due to fraud or negligence. This means that most people having money deducted are not to blame.
Peter Tutton, head of policy at debt charity StepChange told the Sun: “Nearly one in five of our clients with debts owed to Government has tax credit overpayment debt.
“Often, deductions are imposed to repay this debt without properly considering affordability, and in ways that take people by surprise due to poor communication.
"In a recent survey, nearly all (93%) of StepChange clients who had experienced deductions had experienced some financial difficulty or hardship as a result.
“This is part of a wider problem in poor Government debt management practices, where standards need to quickly improve”.
How to challenge a repayment debt
THE benefits experts website EntitledTo says claimants can challenge the decision.
A spokesperson said: "Tax credits sadly always came with the risk of over or under payments but decisions can also be appealed or disputed if they’re wrong.
"Anyone can challenge HRMC’s decision if they’ve received a demand letter and they don’t think they need to pay anything back.
"There are timeframes you need to follow though so get in touch quickly to ask what the debt is for. Then ask how you can challenge the decision if you’re not happy with the reply."
The Sun previously reported that on average, each Universal Credit claimant affected has £1,560 worth of outstanding tax credit debt.
A portion of the debt is automatically deducted from monthly payments, leaving some households without enough cash to live off.
The government has introduced a £20 uplift to Universal Credit payments throughout the pandemic, recognising that many are struggling to make ends meet.
But by bringing back the benefit debt repayments so quickly, hundreds of thousands of households are worse off overall.
Alistair Cromwell, acting chief executive at Citizens Advice, said: “Deductions, particularly if they come out of the blue, can make it really hard for people on Universal Credit to manage their money.
“A more flexible approach is needed so that deductions don’t leave people unable to cover their essential bills.
‘If you’ve been affected by a benefits overpayment and are struggling, your local Citizens Advice can help with free financial advice.”
A government spokesperson told the Times: “We carefully balance our duty to the taxpayer to recover overpayments with our support for claimants.”
The government added that people should have received several notifications and that safeguards are in place to ensure that vulnerable people are supported and deductions are manageable.
It also highlighted that claimants can ask for cuts to be suspended or to have payments rates changed depending on financial circumstances.
The Sun wants to Make Universal Credit Work
UNIVERSAL Credit replaces six benefits with a single monthly payment.
But there are big problems – it takes five weeks to get the first payment and this leaves some families worse off by thousands of pounds a year.
And while working Brits can claim back up to 85% of their childcare costs, they must find the money to pay for childcare upfront.We’ve heard of families waiting up to six months for the money.
Working parents across the country told us they’ve been unable to take on more hours – or have even turned down better paid jobs or more hours because of the amount they get their benefits cut.
The harsh taper rate also makes it hard for Brits to get back to work.
It’s time to Make Universal Credit work. Since December 2018, we've been calling for the government to:
- Get paid faster: The government must slash the time Brits wait for their first Universal Credit payments from five to two weeks, helping stop millions from being pushed into debt.
- Keep more of what you earn: The work allowance should be increased and the taper rate should be slashed from from 63p to 50p, helping at least 4million families.
- Don’t get punished for having a family: Parents should get the 85% of the money they can claim for childcare upfront instead of being paid in arrears.
Together, these changes will help Make Universal Credit Work.
Join our Universal Credit Facebook group or email [email protected] to share your story.
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