London Daily

Focus on the big picture.
Thursday, Apr 17, 2025

More than a million universal credit payments cut over the past year because of historical overpaid tax credits

More than a million universal credit payments cut over the past year because of historical overpaid tax credits

Sky News understands that 29,000 government debt cases - some where the government is at fault, rather than the claimant - are now being handled by private debt collection agencies, despite cost of living pressures.

The government is cutting benefit payments to some of Britain's poorest families or threatening them with debt collectors in a raid that is "plunging people into poverty".

More than a million people have had their universal credit payments cut over the past year because they were overpaid tax credits in the past by HMRC.

Some of these debts are decades-old and in many cases the claimant was not at fault for the overpayment or aware that the debt existed.

Campaigners and MPs called on the government to immediately pause the deductions, an approach that they warned was causing widespread destitution at a time when people are already struggling with the cost of living crisis.

Millions docked because of historical overpayments

Official figures obtained by Sky News show that last year 1.3 million universal credit claimants had payments docked because of historical tax credit overpayments.

It's a figure that's been on the rise.

In total, the Department for Work and Pensions (DWP) deducted £373m from claimants on HMRC's behalf.

Tax credits were introduced in 1999 by the then Labour government to encourage people into work by offering support payments to parents and those on low incomes.

The system is being phased out and people on tax credits will all have moved to Universal Credit by the end of next year.

In 2014 the Treasury agreed with the DWP that, as previous tax credit claimants moved onto Universal Credit, their old tax credit debts would be transferred and collected under the new system.

Blaming claimants for HMRC errors

While HMRC maintains that many of these erroneous payments are down to fraud or errors made by the claimant, a significant number are attributable to errors made by officials.

Charities warned that in some cases HMRC was blaming claimants for errors of its own making.

Michelle Welch from Bromley, south London, is one such case. She was facing deductions of £20 a month to recover an eight-year-old debt of £2,379.26.

Michelle Welch


The mother of three, who now works part-time at a British Heart Foundation charity shop, was hospitalised in October 2015 after suffering a mental health crisis.

Although a support officer telephoned HMRC to explain that she was no longer caring for her three children, HMRC did not stop the payments and the money continued being paid into a bank account that her partner was accessing to support her children.

After multiple attempts to notify the agency, the payments eventually stopped on 28 January 2016.

Years later, in August 2021, HMRC wrote to Ms Welch demanding that she repay the money the agency overpaid in the interim. They claimed she failed to notify them of her change in circumstances in time and her universal credit was docked as a result.

Ms Welch's multiple appeals were rejected.

"I'm just living day by day. I can't save. I can't go out… I could put that extra money on gas and electric," she said.

"I just feel like I'm not getting anywhere. I'm not getting anywhere fast."

After Sky News intervened, HMRC agreed that Ms Welch was not at fault and has now cancelled the debt.

"We apologise to Ms Welch for the inconvenience and upset caused by our mistake," HMRC said. "We've acted to correct her payments and a redress payment will be made."

Ms Welch said her dealings with HMRC and DWP had left her feeling dejected, ignored and stuck in what was a difficult time in her life.

"It's hard for a mother to give up one child let alone three because they're mentally unwell. It wasn't an easy thing to do. [It takes me back to] a place I would never want to be in again. It makes me feel ashamed and terrible.

"I busy myself so that I don't have to think back to what I went through and what my children went through. It's something I should talk to a psychiatrist about, not people I don't know [at HMRC and DWP]."

Not an isolated case


Sky News spoke to dozens of claimants who said they were paying back debts they do not believe, or did not realise, they owed.

Many struggled to get a clear breakdown or explanation from HMRC when they challenged the demands for payment.

Vicky Timlin


Vicky Timlin, from Cheltenham, ended a tax credit claim in September 2021 after moving in with a partner.

She was then told to repay back £909.29 that had been overpaid to her. When she sought an explanation, an HMRC representative told her that the overpayment could only be explained by a "computer glitch" but she would have to repay it regardless.

Ms Timlin is not claiming Universal Credit so her payments have not been docked.

However, HMRC has warned her that the debt will be recouped through any future universal credit claim. Her debt has now been passed on to a private debt collection agency and she is on a payment plan for the next seven years.

Sky News understands that 29,000 cases are now being handled by private debt collection agencies.

"I felt completely helpless. I got off the phone and I was in absolute floods of tears because I just felt like this is so unfair.

"Why have I got to pay this money because of a computer glitch and there was literally nothing that I can do about it and they didn't seem to care at all," she said.

"They shouldn't be doing it to people. They need to be able to explain to people properly why they owe this money and not give them different excuses every time."

HMRC accepted that Vicky did nothing wrong and apologised for its failure to clearly explain the debt to Ms Timlin.

It maintained that she had been overpaid because previous re-calculations of her entitlement had triggered the system to generate duplicate payments.

It said this was a feature of the system and that these overpayments would have balanced out across the remainder of the financial year had she continued with the claim.

"To ensure customers receive regular payments of a similar amount, tax credits awards are calculated across the 12-month financial year," HMRC said.

"Customers are required to tell us of any change in circumstances and when they do, awards are recalculated and balanced across the remainder of the period. This means when a claim ceases during the financial year, in some instances an overpayment may be due."

Official errors disguised


Official reports published by HMRC suggest that errors on the part of officials make up a very small proportion of overpayments, compared to fraud and errors on the part of claimants.

However, charities pointed out that in many cases officials were contributing to errors by providing poor advice on the phone. In the case of Ms Welch, official error was disguised as a claimant error.

Campaigners say the system is causing widespread distress at a time when the cost of living crisis is already driving families into poverty.

Food bank visitors in debt to the government


The Trussell Trust, which oversees a network of more than 1,300 food banks across the UK, has said the vast majority of its visitors were in debt to the government.

MPs from across the political spectrum have urged the government to pause collections while the cost of living crisis is still raging.

Stephen Timms, MP for East Ham


Stephen Timms, MP for East Ham and chair of the work and pensions select committee, said: "People are completely unaware of these debts when suddenly money starts getting taken out of their Universal Credit monthly payments and, in a cost of living crisis with inflation running at current levels, that's causing real hardship for people.

"So my select a committee, which is an all-party committee with a Conservative majority, recommended that the government should pause these deductions while inflation is running at its current level.

"Unfortunately, the government rejected that recommendation, but I think that would be very helpful just to support people through this really, really difficult time."

Newsletter

Related Articles

0:00
0:00
Close
U.S. State Department Raises El Salvador’s Safety Ranking, Making It Safer Than France and Other European Nations
UK Government Assumes Control of British Steel's Scunthorpe Plant Amid Shutdown Threat
UK MP Wera Hobhouse Denied Entry to Hong Kong During Family Visit
Bangladesh Issues Arrest Warrant for UK MP Tulip Siddiq
China Urges United States to Cancel Tariffs Amid Escalating Trade Tensions
The Empire’s USD Pyramid Scheme Is Working Brilliantly—So Why ‘Fix’ It?
China Raises Tariffs on U.S. Goods to 125% Amid Escalating Trade Dispute
Elon Musk Reports $150 Billion in Projected Government Savings Amid Fraud Investigations
U.S. and Panama Finalize Defense Agreements Amid Canal Access and Chinese Influence Concerns
China Stands Firm Amidst Trade Disputes with the US: A Factual Analysis
U.S. Tariff Escalation Sparks Global Trade Tensions
Helicopter crashes in NYC with four people on board.
Australia Dismisses China's Suggestion to Collaborate Against US Tariffs
EU Postpones Response to US Tariffs
The Trump Administration is contemplating removing Chinese companies from U.S. stock exchanges.
Violent Incidents and Public Safety Concerns Escalate in London and County Durham
UK MP Arrested on Suspicion of Rape and Child Sex Offences
UK Gears Up to Respond to US Tariffs with Industrial Strategies and Trade Initiatives
‘Rocky’ star Dolph Lundgren and his wife Emma Krokdal bask in the Miami sunshine following the actor’s lengthy health struggles.
Spain Encounters Countrywide Protests as Housing Crisis Intensifies
Alisha Lehmann's Modeling Campaign and Public Controversy Stir Debate Ahead of UEFA Women's Euro
U.S. Firms with Major International Revenue Exposure in Light of New Tariffs
President Trump Calls on the Federal Reserve to Reduce Interest Rates in Light of New Tariffs
President Trump Prolongs TikTok Sale Deadline by 75 Days
Global Markets Dive Amid Rising U.S.-China Trade Conflicts
British comedian Russell Brand faces charges of rape and several sexual assaults.
Kanye West Reveals in a New Song That His Wife Bianca Censori Has Departed from Him
Actor Jean-Claude Van Damme Accused of Having Sex with Human Trafficking Victims
Tom Cruise Pays Tribute to Val Kilmer at CinemaCon
Europe Pursues Digital Autonomy Amidst Transatlantic Strains
OpenAI Lands Unprecedented $40 Billion Funding.
Charity Chairwoman Accuses Prince Harry of Bullying and Harassment
DOGE revealed that USAID provided $84 million to the Clinton Foundation. Of this amount, $3 million was spent on Chelsea Clinton's wedding, and $10 million was used to acquire a lavish mansion.
The State Department has announced the formal closure of USAID.
Apple's Innovation Deficit: Falling Behind in AI and Foldable Technology as Chinese Developments Progress
President Trump Proposes Military Intervention to Obtain Greenland
Passenger Taken into Custody After Engaging in Masturbation on SWISS Air Flight
Barcelona player Dani Alves found not guilty of rape accusations.
PUTIN'S LIMOUSINE DETONATES—SECURITY CHAOS ENSUES
French Foreign Ministry Denounces U.S. Interference in Corporate Diversity Initiatives
Copyright Issues Emerge as AI-Generated Studio Ghibli Images Gain Popularity
This is what we refer to as CREATIVITY.
Removing the Political Opponent Means Dismissing the Remnants of Turkey's Economy.
Malaysia Strengthens Semiconductor Regulations in Response to U.S. Pressure to Restrict AI NVIDIA Chip Exports to China.
OpenAI Launches New Image Generation Tool for ChatGPT
Ex-FIFA President and French Football Icon Acquitted of Corruption Allegations
National Security Advisor Mike Waltz Under Investigation After Journalist Added to Secret Military Chat
Ex-Business Partner of Hunter Biden Discusses Possible Pardon from President Trump
U.S. Attorney General Announces Task Force to Prosecute Government Fraud
American Brands Face Consumer Boycott in Europe Amid Escalating Trade and Political Tensions
×