Tax Credits and Universal Credit Switch

LocoLoco

Hi everyone, I wondered if anyone could confirm something for me?


We've just switched to Universal Credit so we had a tax credit overpayment to repay. I set up a direct debit to pay it back monthly, first payment went out last month but I've had a letter this month saying they've cancelled the payment plan. It then goes on to give details of how to make a repayment via a gov.uk link but also says underneath that that they'll send the details to Universal Credit as well. I just want to check; will Universal Credit automatically set up deductions to repay it or do I need to set something up myself? Both tax credits and Universal Credit lines are busy at the mo so I thought I'd ask here in case anyone knows



Thanks in advance for any replies

pmlindyloo

Everything you need to know here:

https://www.gov.uk/tax-credits-overpayments/universal-credit

LocoLoco

pmlindyloo wrote: »

Everything you need to know here:

https://www.gov.uk/tax-credits-overpayments/universal-credit

That's great, pmlindyloo, thanks so much for putting it up.

roosterpotatoes

Hi LocoLoco, I was in exactly the same situation. HMRC pass the debt to DWP and they automatically readjust your Universal Credit payment. They overpaid me by about £143 and took it back over three months. There is a number to call when you log into Universal Credit.

LocoLoco

roosterpotatoes wrote: »

Hi LocoLoco, I was in exactly the same situation. HMRC pass the debt to DWP and they automatically readjust your Universal Credit payment. They overpaid me by about £143 and took it back over three months. There is a number to call when you log into Universal Credit.

Thanks, roosterpotatoes, I'll check that it gets sorted, I've been quite nervous about the whole UC thing. The overpayment wasn't huge, thank goodness, so should be cleared fairly soon, I just like to double check everything so I don't get caught out

huckster

A couple of points.

Any existing Government debt, might not be deducted from a UC payment on the UC first monthly statement. It can sometimes take a few months, before the systems realise that you are on UC and they arrange to deduct from UC payments.

And the amount of deduction will depend on what other deductions are being made. Deductions are normally restricted to 40% of the standard UC allowance. If you have taken out an advance UC payment, then as the deductions to repay the advance are part of the 40% calculation, this will affect how much is taken to pay the Tax Credit debt.

calcotti

The maximum deduction rate from UC will reduce from 40% to 30% in October 2019 which will be welcome for those in this situation.

LocoLoco

huckster wrote: »

A couple of points.

Any existing Government debt, might not be deducted from a UC payment on the UC first monthly statement. It can sometimes take a few months, before the systems realise that you are on UC and they arrange to deduct from UC payments.

And the amount of deduction will depend on what other deductions are being made. Deductions are normally restricted to 40% of the standard UC allowance. If you have taken out an advance UC payment, then as the deductions to repay the advance are part of the 40% calculation, this will affect how much is taken to pay the Tax Credit debt.

Thanks Huckster, we had our first payment in January and they'd organised deductions for our advance; I organised repaying the tax credits separately (I didn't realise they'd transfer it across) so I've already paid back a third of it and was expecting to pay the rest so we should still be alright financially. I think we were very lucky with it; it seemed to go through relatively smoothly and it seems to have been alright so far. I still feel a bit anxious not being certain it will go in to my account when it's meant to just because it's still new but I think that's just from being used to getting various payments at various times through the month. It takes a while to get used to any change, I guess, and you do have to change your habits and routines to accommodate it. Hopefully all will be well and I guess once the tax credits payment is added on there won't be any other changes then Thanks for the info

LocoLoco

calcotti wrote: »

The maximum deduction rate from UC will reduce from 40% to 30% in October 2019 which will be welcome for those in this situation.

That is helpful, Calcotti, thanks for that. I think we're paying back much less than 40%, probably nearer 20%? Presumably it's because I didn't borrow as much as I could have. We're okay with it all at the mo; I'm relieved because there have been so many negative stories but we seem to be okay - fingers crossed