UC Overpayment

Durhamdragon

Relative has just received an overpayment notification for Universal Credit for £6000. This is due to DWP error of not considering an ISA as capital. The claim was before ISAs were exempt. Have they any way of reducing this amount? 
Also, will this debt affect a mortgage application? 

Alice_Holt

Durhamdragon said:

Relative has just received an overpayment notification for Universal Credit for £6000. This is due to DWP error of not considering an ISA as capital. The claim was before ISAs were exempt. Have they any way of reducing this amount? 

     It's more likely that your relative failed to tell UC of their savings in an ISA.
     Savings in ISA's have always been included in the £6k / £16k capital thresholds.

     All UC overpayments are recoverable - enough if arising through official error. 

kaMelo

To add, they have not been exempted going forward either. ISA's are and always have been included as capital.

poppy12345

Durhamdragon said:

Have they any way of reducing this amount? 
Also, will this debt affect a mortgage application? 

No, not at all. They will need to make arrangements to repay it, even if it's by installments. It won't affect any mortgage application because DWP debt doesn't affect credit history.

Durhamdragon

The ISA was a help to buy and was declared, noted in journal

Alice_Holt

Durhamdragon said:

The ISA was a help to buy and was declared, noted in journal

       There was some talk last year (by Johnson) that the government would explore if HtB and Lisa's could be disregarded from the £16k limit.  Don't think anything came of it. 

     If your relative has a screen print / proof of declaration, then I'd be contacting the DWP to ask that they exercise their discretion and not recover the over payment. Get their MP involved. 

    Under legacy benefits this would have not been recoverable as official error. HMG changed this for UC (as noted in the earlier post).   

NedS

Durhamdragon said:

The ISA was a help to buy and was declared, noted in journal

In that case, the good news is there will not be a civil penalty (fine) of £50 for failing to declare it, but the overpayment is still recoverable. If the capital amount was over £16k then the whole claim would be invalid and the whole amount received would be an overpayment.

To get the overpayment waived (or considered), you would need to demonstrate significant financial hardship, which would be difficult given substantial capital assets in an ISA (it does not matter what it was intended for). You will need to repay the overpayment so you should contact debt recovery and set up a repayment plan.

tomtom256

Durhamdragon said:

The ISA was a help to buy and was declared, noted in journal

That isn't where you declare it, so it would have likely been ignored. It should have either been declared as savings either during initial claim declaration or via the report a change section of your account, if they went over the savings limit after the claim was made.

Durhamdragon

It was declared as savings in initial claim and DWP noted this in the journal.

Durhamdragon

DWP also sent a letter saying they owed them more UC as capital was no longer being taken into account in early 2020!!

kaMelo

Durhamdragon said:

DWP also sent a letter saying they owed them more UC as capital was no longer being taken into account in early 2020!!

That needs sime clarification, UC never ignores capital bar specific reasons, cost of living payments for example.

What exactly did they write?