Overpayment of benefits

What is an overpayment? 

 A Housing Benefit overpayment is any amount paid which you are not entitled to. This could be because you are not entitled to any Housing Benefit, or it could that you have been paid more than you are entitled to.   

Why have I been overpaid? 

The most common reason for an overpayment is that your income has changed. This could be a change in your entitlement to other benefits, or a change in your earned income or pensions.  

Other reasons for an overpayment are: 

  • Your rent has decreased 

  • A child in your household is now a non-dependant 

  • Your capital has risen above £6,000 or £16,000 

  • There has been a delay in us processing a change in your circumstances 

  • We have made a mistake when calculating your entitlement 

  • The Department for Work and Pensions have made a mistake 

  • You have fraudulently claimed Housing Benefit you are not entitled to 

  • You have not provided information we requested so we have made an assumption about your circumstances.  

This is not an exhaustive list. You may have been overpaid for another reason which will be shown on your overpayment letter.  

You must report all changes in circumstances for you and your household. If you are not sure whether the change will effect your entitlement to Housing Benefit, you should tell us anyway. You must also check your award notifications carefully and tell us straight away if you think we have made a mistake.  

How is an overpayment calculated? 

An overpayment is calculated by taking the amount of Housing Benefit you should have been paid from what you were actually paid. You will be sent an award notification showing the calculation of your Housing Benefit entitlement.  

It may be possible to reduce your overpayment if you have had another change in circumstance which would have increased your entitlement to Housing Benefit. This is known as underlying entitlement.  

In order for us to consider underlying entitlement, you will need to provide evidence of all your income and savings for the period of the overpayment. We can then assess the amount of benefit that you would have been entitled to if we had known your correct circumstances at the time. 

We can only use Underlying Entitlement to reduce an overpayment. We cannot use it to pay you any extra benefit. You will then be notified of the remaining overpayment balance that you will need to pay back. 

Without sufficient evidence of income and savings, it will not be possible to assess a claim for Underlying Entitlement and your overpayment will remain recoverable. You normally need to provide evidence of your income and savings within 1 month of the overpayment being notified to you. 

If your overpayment was caused by your capital increasing above £16,000, we may be able to reduce your overpayment by carrying out a diminution of capital calculation. To do this we will need all bank statements for the whole period of the overpayment. We will then look at what your capital would have been, if you had not been receiving Housing Benefit, and reduce the overpayment.  

Do I have to repay an overpayment? 

The majority of overpayments are considered recoverable, and you will have to repay it in full.  

If your Housing Benefit is paid to your landlord and they could have known you were being overpaid, we may ask your landlord to pay back the overpayment. They may ask you to repay them.  

If your overpayment has been caused by an error by us or the DWP, you may not be asked to repay the overpayment if you could not have known that you were being overpaid.  

How will you recover the overpayment? 

If you have an overpayment of Housing Benefit but are still entitled to benefit we will normally reduce your on-going Housing Benefit until the overpayment has been recovered. We will write and tell you what we propose to do. 

The standard recovery rates from April 2023 are as follows:- 

  • Standard weekly rate deducted from on-going Housing Benefit entitlement is £12.75

  • Where the overpayment has arisen as a result of fraud the weekly rate from on-going Housing Benefit entitlement is £21.25

In addition, the Local Authority can increase the deductions by half (50%) of certain disregards, if applicable (earnings, regular charitable income or voluntary payments, War Disablement Pension, War Widows Pension).  

If you are in receipt of Housing Benefit from a different local authority, we may ask them to recover the overpayment on our behalf.  

If an overpayment of Housing Benefit occurs and you are no longer entitled to Housing Benefit, we will send you an invoice for the outstanding balance. The invoice will give your options for how to pay back your overpayment.  

 You can make a payment online here.  

If you are unable to pay back your overpayment in full you can set up an arrangement directly with us. To do this, we will need details of all of your income and expenditure. We need this information to ensure that you can afford the arrangement, and that the overpayment will be paid back as quickly as is reasonably possible.  

Our income and expenditure form can be found here.  

If you do not respond to our invoice, or any subsequent letters about your overpayment, we may decide to take further recovery action against you.  This could include,  

  • contacting your employer (where you have one) to arrange for deductions to be made from your earnings through a Direct Earnings Attachment, or 

  • requesting the DWP recover the overpayment from your entitlement to other benefits such as Universal Credit 

  • asking the Council’s enforcement agents to collect this money on our behalf. This will only be done as a last resort, and you may incur additional charges from the enforcement agents.  

If you are currently repaying an overpayment but find that the arrangement has become unaffordable, you should contact us as soon as possible to discuss any changes that can be made. If you stop paying without contacting us, we may take some of the steps listed above.  

What should I do if I disagree with the overpayment? 

If you think our decision that you have been overpaid is wrong or you do not understand why you have been overpaid.  You should contact us in writing within one calendar month of our decision and request a statement or reasons, or a reconsideration of our decision.  

If you request a reconsideration of our decision, you should include what aspect of our decision you think is wrong, your reasons and any documents you think supports you. We will then respond to you in writing telling you whether we have changed our decision and the reasons for our decision.  

Following the request for reconsideration, if our decision isn’t changed and you continue to disagree with it, you can appeal against our decision. We will look at it again, and if it cannot be changed, we will refer your appeal to the Tribunal Service.  

You can submit a late request for reconsideration or appeal up to 13 months after the date of our decision. After this date, you no longer have any right of appeal against our decision.  

You can challenge many aspects of our decision, including: 

  • The calculation of the overpayment (for example you think we have used too much income)  

  • The period of the overpayment (for example you think we have applied income from the incorrect date) 

  • Whether an overpayment caused by an error made by us or the DWP is recoverable. In order for the overpayment to be recoverable, it must be reasonable to expect you to have known you were being overpaid

  • The calculation of underlying entitlement 

  • The calculation of diminution of capital  

You cannot challenge the following: 

  • Who the overpaid is recovered from (for example your Housing Benefit was paid to your landlord, but the invoice is sent to you) 

  • Whether a recoverable overpayment should be recovered (for example you think we shouldn’t recover the overpayment as you cannot afford to repay it) 

  • The recovery rate (you may ask us to reduce the amount temporarily if you are in financial hardship) 

  • The method of recovery (for example you are unhappy that we have requested a deduction from your earnings)  


I have another question about an overpayment. 

If you have a question about an overpayment which is not answered above, you can us our online contact form, email benefits@testvalley.gov.uk or call us on 01264 368000.