To ask the Secretary of State for Work and Pensions, what assessment she has made of the effect of the covid-19 outbreak on the interface on tax credit debt and deductions from universal credit.
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.
Our stance remains that 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.
Whilst we have no current plans to pause the recovery of Tax Credit overpayments from Universal Credit, we have been clear that we will keep our Covid measures under review.