Universal Credit officials are known to keep a track of changes in the circumstances of claimants that may affect their claim. Through this article we aim to assess whether Universal Credit can take money back from its claimants; if yes, what are the potential reasons for this. In addition to this, we will also assess whether real-life situations such as a change in income or overpayment of tax credits bear any impact on one’s Universal Credit payments.

Can Universal Credit Take Money Back?

Yes, Universal Credit can take money back if the claimant is in debt. This may include any of the following forms of debt that the claimant owes to authorities:

  • Repayment of an advance on your Universal Credit payment. This is an amount requested by claimants from the DWP while they await their first monthly assessment and UC claim to be paid or when the amount that they claimed earlier is about to change due to a change in circumstances. If claimants are unable to meet their living costs during this time, they can ask for an advance which serves as an interest-free loan against their claim which can be repaid in mutually agreed instalments.
  • Overpayment of your Universal Credit claim. If a claimant has received an excess amount as part of their claim, they owe this amount to the DWP and will be required to return the additional amount; usually through reduced future payments.
  • Overpayment of any other benefit such as Tax Benefit or Housing Benefit. If a claimant has been overpaid other benefit claims, Universal Credit can reduce their payment to them to adjust the additional amount. If someone does not hear from the DWP regarding overpayment of benefits, they must inform them on their own otherwise they may be penalised in the future.
  • Return of a hardship payment taken due to a sanction on your Universal Credit account. If someone has been sanctioned by the DWP and will not be receiving their benefits claim or will be receiving a reduced amount temporarily, they can ask for hardship payment from the authorities. This is a repayable amount that must be returned as per the mutually agreed on due date and schedule of instalments.
  • Repayment of a budgeting loan that aims to help claimants manage everyday living costs or even travel costs incurred for commute within the UK.
  • Third-party deductions such as payments for utilities, Council Tax, child maintenance, rent, service charges or court fines. You will receive a message from the authorities in your online journal in case this happens.

Whenever a deduction is made from your Universal Credit claim, it will be mentioned in your UC statement. You will find your online statement by logging in to your Universal Credit account and clicking on the “payments” section.

The usual deduction is 25% of the claimant’s standard allowance; before the addition of elements that cover child care and housing costs.

If a claimant believes that their Universal Credit payments have been reduced in error, they must inform the DWP and provide evidence in support of their claim.

However, it must be noted that Universal Credit can take money back not only on the basis of the payments received on behalf of itself but also due to a change in circumstances such as an increase in income that a claimant did not report to them or if they have overpaid benefits from other sources such as Tax Credits.  

Can Universal Credit Take Money Back If You Have Overpaid Tax Credits?

Yes, Universal Credit can take money back by reducing your payments if you have overpaid Tax Credits. In such cases,  the HMRC usually inform the claimants of the amount that is due and the mode of repayment. However, how you repay an overpayment of tax credits to HMRC depends on the following factors:

  • you still get tax credit payments
  • you are claiming Universal Credit
  • you are receiving neither tax credit nor Universal Credit

If you still get tax credits, HMRC will simply reduce your tax credits to account for the overpayment. The amount that is reduced each month will depend on how much you receive from them and your household income. Below are the details of this reduction:

  • if your household income is £20,000 or less and you get maximum tax credits, the reduction will be10%
  • if your household income is £20,000 or less and you get less than the maximum tax credits, the reduction will be 25%
  • if your household income is more than £20,000, the reduction will be 50%

If you are claiming Universal Credit and have overpaid tax credits, your future payments will be reduced by the HMRC until your dues are cleared.

If you receive neither tax credits nor Universal Credit, you will be sent a “notice to pay” by HMRC which you must pay within 30 days. 

Can Universal Credit Take Money Back If Your Income Increases? 

Yes, Universal Credit can take money back by reducing your payments or in some cases revoking them altogether if there is an increase in your income.

If you are working and there is an increase in your salary, you must inform the DWP immediately as each increase in income by £1, reduces your Universal Credit claim by 55p. 

However, if you or your partner are taking care of a child or either of you are affected by disability or a health condition that reduces your ability to work, an increase in your income will not cause Universal Credit to reduce your payment.

If your income increases to the point that you are no longer eligible for Universal Credit, the authorities will inform you and further payments will be stopped.

You can check your Universal Credit status by signing in to your Universal Credit account.


The discussion in this blog post highlights real-life situations due to which Universal Credit may have to take money back from claimants. While the debt that they owe can be in the form of unpaid rent and utilities or overpaid benefits (in addition to Universal Credit payments) any change in financial circumstances that increases your income can cause Universal Credit payments to reduce or money to be taken back by the authorities.

FAQs: Can Universal Credit Take Money Back?

What happens if I have to pay back Universal Credit?

If you have to pay back Universal Credit, you can expect a deduction of 25% of your standard allowance until you are debt-free.

Can Universal Credit Check your bank?

Yes, the DWP can check your bank account and other financial transaction in connection with your Universal Credit claim.

What triggers a DWP investigation?

If there is reason to suspect a claimant of benefit fraud and there is evidence to prove it, a DWP investigation may be triggered.

Can DWP take money from my bank account?

While the DWP can monitor your bank account activity if they suspect you of fraud, they will not take money from it directly.

What is the punishment for benefit cheats?

Depending on the scale of the fraud and the severity of the situation, benefit cheats may face their claim being revoked or reduced, a penalty being levied on them or in extreme cases, they may face a prison sentence.


Find out about money taken off your Universal Credit payment – GOV.UK

Overpayments under the Universal Credit system – Will I have to repay the overpayment?

If your Universal Credit is stopped or reduced – Citizens Advice

Understanding Universal Credit – Sanctions

Repaying benefit debts and overpayments | MoneyHelper