Early Warning System eBulletin – June 2025
A note on disability benefit proposals: On 18 March 2025, the government published their green paper outlining proposed changes to health and disability benefits – the biggest cut in a generation. Read our initial briefing response and our recent more detailed briefing. We will be publishing a full consultation response and encourage others to respond by the deadline of 30 June 2025.
The issue
We have seen lots of cases of claimants being overpaid legacy benefits when they migrate to UC due to delays in ID verification. These overpayments should be dealt with differently to other overpayments, and advisers are reporting confusion about the practice, in part due to miscommunication from the DWP and an inconsistency in applying the rules.
Regulation 8 of the Universal Credit (Transitional Provisions) Regulations 2014 states that a claimant’s legacy benefits will end after a claim for UC is made. Regulation 8 is satisfied when the basic conditions in section 4(1) of the Welfare Reform Act 2012 have been met (excluding acceptance of a claimant commitment). For tax credits, payments end straight away, for other legacy benefits there is often a 2-week run-on.
Once a claim for UC has been made, entitlement to legacy benefits ends and a ‘stop notice’ is issued. UC entitlement dates are determined when regulation 8 is satisfied, not when the stop notice is issued. This means, if there is a delay in issuing stop notices, there can be an ‘overlap’ where legacy benefits continue to be paid (beyond the 2-week run-on) when entitlement to UC has started.
Example
Julie claimed universal credit on 18 March. Factoring in a 2-week run-on, Julie’s income-related ESA should have ended on 1 April. Julie needed a home visit to confirm her identity and this wasn’t completed until 28 April, at which point her UC award was decided and she received her first payment. Julie continued to be paid irESA for the period up to and including 28 April.
In practice, despite not being a condition of basic entitlement, we are routinely seeing cases where stop notices are not issued until ID verification on UC has taken place, particularly in relation to claimants waiting for home visits. This appears to be a feature of the system; internal guidance, obtained by freedom of information requests, states: 'claims are not recognised by our systems until ID has been verified' (document 9, p28).
In these cases, claimants are being paid legacy benefits beyond the 2-week run-on and consequently being overpaid legacy benefits. We saw this happen with tax credits, however, the regulation surrounding this works differently for other legacy benefits.
What should be happening: Regulation 10
Regulation 10 of the UC (TP) Regs 2014 applies where an award of UC is made to a claimant who was previously entitled to legacy benefit (except tax credits or joint-claim JSA) and an overpayment of this legacy benefit is made during an assessment period (AP) for UC.
In such instances, the overpaid legacy benefits should be treated as unearned income and deducted from a claimant’s UC award. As such, the overpaid legacy benefits should not be recovered under the usual overpayment regulations.
Case study: overpayment is deducted as unearned income
The Early Warning System reports of cases where the DWP has sent recovery demands despite treating the overpaid legacy benefits as unearned income in accordance with regulation 10:
A client made a claim for UC and had to wait for a home visit to confirm her ID. The claimant continued to be paid income-related ESA beyond the 2-week run-on. When the claimant was awarded UC, the irESA overpayment was deducted as income from her first assessment period payment. The claimant later received a letter notifying her of the irESA overpayment and the intention to recover it.
In this instance, treating the irESA overpayment as unearned income and making the appropriate deduction from the claimant’s UC award, as per regulation 10 clears ‘the debt’ to the DWP. The ESA paid after the run-on ended cannot then be recovered under the usual regulations governing irESA overpayments and a demand for repayment should not be sent.
It might be the case that an overpayment letter is sent to notify the claimant that technically, an overpayment has occurred. However, this letter should clearly explain that the legacy benefits paid after entitlement to UC began and run-on of legacy benefits had ceased, had been treated as unearned income, clearing the debt to the department. As no further recovery is needed, references to overpayment powers of recovery cause unnecessary confusion and alarm to claimants.
The EWS has received report of a local authority outlining this to a claimant in a HB overpayment letter, citing regulation 10.
Case study: overpayment is not deducted as unearned income
The Early Warning System received the following report:
After claiming UC, a claimant’s income support and housing benefit continued to be paid (beyond the run-on) while she waited for a home visit to verify her ID. When she eventually received her award of UC, the overpaid legacy benefits were not treated as unearned income as regulation 10 demands that they should be. The claimant subsequently received overpayment letters from UC, IS, and HB. All three of which stated the overpayment was recoverable.
In this instance, the claimant has been overpaid income support (IS) and housing benefit (HB) as she was paid them during a period when she was entitled to UC and run-ons of IS and HB had ended. However, these should have been deducted from the claimant’s UC award as unearned income and not recovered elsewhere.
As a result of not deducting these overpayments as unearned income, the claimant has been overpaid UC. The UC payment is recoverable, as all UC overpayments are, but not the overpayments of IS or HB.
Uncertainty in practice
The DWP’s practice of sending stop notices only once ID has been verified is not, in itself, unwelcome. It acts as a safeguard to prevent claimants being left without income due to delays in ID verification for UC.
However, as outlined above, there are concerning issues about how legacy benefits which are overpaid before the stop notice is issued are being treated by the DWP. It is important that overpayment decisions are made and communicated correctly to avoid confusion to claimants and the risk they pay back money incorrectly.
The practice of delaying issuing stop notices until after ID verification also does not appear to be a applied consistently and there is no clear guidance surrounding it that CPAG is aware of. We have heard reports of claimants being told conflicting information as a result.
A claimant made a UC claim and was told they would have to wait 8 weeks for a home visit to verify their ID. The claimant was told by a UC case manager that their legacy benefits wouldn’t stop until this verification had taken place. The claimant was later informed by a UC helpline adviser that their legacy benefits would only be paid until their deadline day [with a 2-week run-on]. The claimant’s deadline day is imminent, and they are very concerned they will be left without income.
Clarity on this practice is needed as it will reassure claimants that they will not be left without income due to delays in ID verification beyond their control.
In order to raise any issues and seek clarity on the practice with the DWP, we would like to hear more about how this is working in practice, and the sort of communication clients are receiving regarding any overpayments. We need your case studies: Is your client facing a similar delay caused by verification? Have they received demands for recovery of debts when the DWP have failed to treat overpaid legacy benefits as unearned income? Do you have examples of overpayment letters or demands for repayment? If so, please get in touch with the EWS and tell us about your clients’ case in complete confidence.
Do you have something to tell us?
Hearing about your cases has a profound impact on our work.
Some of the topics we are looking out for include:
- Transitional element calculation breakdowns - Are any of your clients having difficulty obtaining a transitional element calculation breakdown? Or, if obtained, is the breakdown inadequate?
- Council tax reduction/support (CTR/S) - Have any of your clients either lost or had a reduction in their CTR/S following migration to UC?
- Targeted Case Reviews - Do you have a client who has experienced a ‘Targeted Case Review’ on universal credit?
Submit a case online or email [email protected] to tell us more. We can also be reached by phone on 020 3955 4493.
If you know an individual who would like to contact us directly about their own case, please let them know about our contact form for non-advisers.
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