As part of our initial response to the Covid-19 pandemic we suspended recovery of all overpayment deductions as well as pausing notification of any new overpayments. The transfer of Tax Credit debts from HMRC to DWP was temporarily suspended as part of this approach.
Recovery of existing Tax Credit overpayments from Universal Credit has now resumed, along with the transfer of new Tax Credit debt to DWP.
There have been several discussions with HMRC, who own the Tax Credit Debt, to ensure that both the action of stopping tax credit collection and restarting has taken into account the customer perspective.
We want to ensure that repayment of all debt owed to the Department is sustainable and takes into account the customer’s ability to pay. Claimants are encouraged to contact DWP if they are unable to afford the rate of recovery. The recovery rate of Tax Credit overpayments can be reduced where a claimant is experiencing financial hardship.