More than a million universal credit payments cut over the past year because of historical overpaid tax credits

Published

2 years ago

March 23, 2023

admin

The government is cutting benefit payments to some of Britain’s poorest families or threatening them with debt collectors in a raid that is “plunging people into poverty”.

More than a million people have had their universal credit payments cut over the past year because they were overpaid tax credits in the past by HMRC.

Some of these debts are decades-old and in many cases the claimant was not at fault for the overpayment or aware that the debt existed.

Campaigners and MPs called on the government to immediately pause the deductions, an approach that they warned was causing widespread destitution at a time when people are already struggling with the cost-of-living crisis.

Millions docked because of historical overpayments

Official figures obtained by Sky News show that last year 1.3 million universal credit claimants had payments docked because of historical tax credit overpayments.

It’s a figure that’s been on the rise.

In total, the Department for Work and Pensions (DWP) deducted £372.576m from claimants on HMRC’s behalf.

Tax credits were introduced in 1999 by the then Labour government to encourage people into work by offering support payments to parents and those on low incomes.

The system is being phased out and people on tax credits will all have moved to Universal Credit by the end of next year.

In 2014 the Treasury agreed with the DWP that, as previous tax credit claimants moved onto Universal Credit, their old tax credit debts would be transferred and collected under the new system.

Blaming claimants for HMRC errors

While HMRC maintains that many of these erroneous payments are down to fraud or errors made by the claimant, a significant number are attributable to errors made by officials.

Charities warned that in some cases HMRC was blaming claimants for errors of its own making.

Michelle Welch from Bromley, south London, is one such case. She was facing deductions of £20 a month to recover an eight-year-old debt of £2,379.26.

The mother of three, who now works part-time at a British Heart Foundation charity shop, was hospitalised in October 2015 after suffering a mental health crisis.

Although a support officer telephoned HMRC to explain that she was no longer caring for her three children, HMRC did not stop the payments and the money continued being paid into a bank account that her partner was accessing to support her children.

After multiple attempts to notify the agency, the payments eventually stopped on 28 January 2016.

Years later, in August 2021, HMRC wrote to Ms Welch demanding that she repay the money the agency overpaid in the interim. They claimed she failed to notify them of her change in circumstances in time and her universal credit was docked as a result.

Ms Welch’s multiple appeals were rejected.

“I’m just living day by day. I can’t save. I can’t go out… I could put that extra money on gas and electric,” she said.

“I just feel like I’m not getting anywhere. I’m not getting anywhere fast.”

After Sky News intervened, HMRC agreed that Ms Welch was not at fault and has now cancelled the debt.

“We apologise to Ms Welch for the inconvenience and upset caused by our mistake,” HMRC said. “We’ve acted to correct her payments and a redress payment will be made.”

Ms Welch said her dealings with HMRC and DWP had left her feeling dejected, ignored and stuck in what was a difficult time in her life.

“It’s hard for a mother to give up one child let alone three because they’re mentally unwell. It wasn’t an easy thing to do. [It takes me back to] a place I would never want to be in again. It makes me feel ashamed and terrible.

“I busy myself so that I don’t have to think back to what I went through and what my children went through. It’s something I should talk to a psychiatrist about, not people I don’t know [at HMRC and DWP].”

Not an isolated case

Sky News spoke to dozens of claimants who said they were paying back debts they do not believe, or did not realise, they owed.

Many struggled to get a clear breakdown or explanation from HMRC when they challenged the demands for payment.

Vicky Timlin, from Cheltenham, ended a tax credit claim in September 2021 after moving in with a partner.

She was then told to repay back £909.29 that had been overpaid to her. When she sought an explanation, an HMRC representative told her that the overpayment could only be explained by a “computer glitch” but she would have to repay it regardless.

Ms Timlin is not claiming Universal Credit so her payments have not been docked.

However, HMRC has warned her that the debt will be recouped through any future universal credit claim. Her debt has now been passed onto a private debt collection agency and she is on a payment plan for the next seven years.

Sky News understands that 29,000 cases are now being handled by private debt collection agencies.

“I felt completely helpless. I got off the phone and I was in absolute floods of tears because I just felt like this is so unfair.

“Why have I got to pay this money because of a computer glitch and there was literally nothing that I can do about it and they didn’t seem to care at all,” she said.

“They shouldn’t be doing it to people. They need to be able to explain to people properly why they owe this money and not give them different excuses every time.”

HMRC accepted that Vicky did nothing wrong and apologised for its failure to clearly explain the debt to Ms Timlin.

It maintained that she had been overpaid because previous re-calculations of her entitlement had triggered the system to generate duplicate payments.

It said this was a feature of the system and that these overpayments would have balanced out across the remainder of the financial year had she continued with the claim.

“To ensure customers receive regular payments of a similar amount, tax credits awards are calculated across the 12-month financial year,” HMRC said.

“Customers are required to tell us of any change in circumstances and when they do, awards are recalculated and balanced across the remainder of the period. This means when a claim ceases during the financial year, in some instances an overpayment may be due.”

Official errors disguised

Official reports published by HMRC suggest that errors on the part of officials make up a very small proportion of overpayments, compared to fraud and errors on the part of claimants.

However, charities pointed out that in many cases officials were contributing to errors by providing poor advice on the phone. In the case of Ms Welch, official error was disguised as a claimant error.

Campaigners say the system is causing widespread distress at a time when the cost-of-living crisis is already driving families into poverty.

Food bank visitors in debt to the government

The Trussell Trust, which oversees a network of more than 1,300 food banks across the UK, has said the vast majority of its visitors were in debt to the government.

MPs from across the political spectrum have urged the government to pause collections while the cost-of-living crisis is still raging.

Stephen Timms, MP for East Ham and chair of the work and pensions select committee, said: “People are completely unaware of these debts when suddenly money starts getting taken out of their Universal Credit monthly payments and, in a cost-of-living crisis with inflation running at current levels, that’s causing real hardship for people.

“So my select a committee, which is an all-party committee with a Conservative majority, recommended that the government should pause these deductions while inflation is running at its current level.

“Unfortunately, the government rejected that recommendation, but I think that would be very helpful just to support people through this really, really difficult time.”

UK

Martin Lewis reveals who is due for car finance compensation – and how much they’ll get

Published

9 hours ago

August 4, 2025

admin

Martin Lewis reveals who is due for car finance compensation - and how much they'll get

Martin Lewis says motorists who were mis-sold car finance are likely to receive “hundreds, not thousands of pounds” – with regulators launching a consultation on a new compensation scheme.

The founder of MoneySavingExpert.com believes it is “very likely” that about 40% of Britons who entered personal contact purchase or hire purchase agreements between 2007 and 2021 will be eligible for payouts.

“Discretionary commission arrangements” saw brokers and dealers charge higher levels of interest so they could receive more commission, without telling consumers.

Speaking to Sky News Radio’s Faye Rowlands, Lewis said: “Very rarely will it be thousands of pounds unless you have more than one car finance deal.

“So up to about a maximum of £950 per car finance deal where you are due compensation.”

Lewis explained that consumers who believe they may have been affected should check whether they had a discretionary commission arrangement by writing to their car finance company.

However, the personal finance guru warned against using a claims firm.

“They’re hardly going to do anything for you and you might get the money paid to you automatically anyway, in which case you’re giving them 30% for nothing,” he added.

Yesterday, the Financial Conduct Authority said its review of the past use of motor finance “has shown that many firms were not complying with the law or our disclosure rules that were in force when they sold loans to consumers”.

The FCA’s statement added that those affected “should be appropriately compensated in an orderly, consistent and efficient way”.

Lewis told Sky News that the consultation will launch in October – and will take six weeks.

“We expect payouts to come in 2026, assuming this will happen and it’s very likely to happen,” he said.

“As for exactly how will work, it hasn’t decided yet. Firms will have to contact people, although there is an issue about them having destroyed some of the data for older claims.”

He believes claims will either be paid automatically – or affected consumers will need to opt in and apply to get compensation back.

What motorists should do next

The FCA says you may be affected if you bought a car under a finance scheme, including hire purchase agreements, before 28 January 2021.

Anyone who has already complained does not need to do anything.

The authority added: “Consumers concerned that they were not told about commission, and who think they may have paid too much for the finance, should complain now”.

Its website advises drivers to complain to their finance provider first.

If you’re unhappy with the response, you can then contact the Financial Ombudsman.

Any compensation scheme will be easy to participate in, without drivers needing to use a claims management company or law firm.

The FCA has warned motorists that doing so could end up costing you 30% of any compensation in fees.

The FCA estimates the cost of any scheme – including compensation and administrative costs – to be no lower than £9bn.

But in a video on X, Lewis said that millions of people are likely to be due a share of up to £18bn.

The regulator’s announcement comes after the Supreme Court ruled on a separate, but similar, case on Friday.

UK

UK weather: Storm Floris sparks amber warning – with trains cancelled

Published

11 hours ago

August 4, 2025

admin

UK weather: Storm Floris sparks amber warning - with trains cancelled

Storm Floris is nearing the UK – with train companies in the hardest-hit areas urging passengers not to travel today.

The Met Office has issued an amber “danger to life” warning for wind in parts of Scotland, with gusts of up to 90mph possible.

That alert is in force from 10am until 10pm, with forecasters warning “unusually strong” winds could close roads and damage buildings.

Check the latest weather forecast here

A wider yellow warning – covering the North of England and Northern Ireland – is also active between 6am this morning and 11.59pm tonight.

Train operator LNER has warned passengers not to travel north of Newcastle, while Avanti West Coast has advised its customers not to travel north of Preston as it will be “heavily affected” by the weather.

“We’re expecting heavy rain and high winds to result in disruption of services,” LNER said in a statement.

Some trains have already been cancelled in Scotland, with Network Rail saying several lines will be closed from 12pm. Other routes will run with a reduced timetable and longer journey times.

Among the routes set to close at midday are Edinburgh to Fife, Perth to Dundee, and Aberdeen to Inverness, as well as the West Highland Line.

The storm could also lead to road closures – and several ferry services have already been cancelled by Scottish operator CalMac.

The Met Office said that much of Scotland, particularly western coastal areas, will be battered by heavy rain and windy conditions.

The strongest gusts are expected this afternoon and into the evening – but a Met Office spokesperson warned “there remains some uncertainty in the depth and track of Floris”.

Sky News’ weather presenter Jo Wheeler said: “Storm Floris is likely to bring a spell of weather not usually associated with the height of summer.

“Travelling across the Atlantic, this otherwise unremarkable, low-pressure system will cross a powerful jet stream, exiting on the cold side, renowned for storm formation.”

She said inland gusts of 50mph to 60mph are widely possible, potentially reaching 80mph to 90mph over exposed coasts, hills and bridges.

“The rain associated with this storm will largely clear through early tomorrow, but it’s as the rain goes that the winds start to strengthen,” she warned.

UK

How Air India crash victim’s grieving family discovered remains mix-up

Published

12 hours ago

August 4, 2025

admin

How Air India crash victim's grieving family discovered remains mix-up

Almost two months after Air India Flight 171’s deadly crash, some of the 53 British nationals on board are only now being laid to rest.

Some 300 friends, families, and locals from the Gujarati community in and around London gathered in Wembley for a prayer and memorial service dedicated to remembering some of the victims.

Wearing his father’s emerald ring that was miraculously recovered from the wreckage, Miten Patel addresses the crowd.

His parents, Ashok and Shobhana Patel, were travelling back to their home in Orpington, Kent, after a spiritual trip to India, when they were killed in the crash on 12 June.

Their funeral was held only days ago, after being delayed following the discovery that the remains of other individuals were found in Miten’s mother’s casket.

He credits Professor Fiona Wilcox, the senior coroner at Inner West London Coroner’s Court, for meeting with him and his family to break the news.

“My parents were the first ones repatriated in the UK,” Miten explains – he organised the repatriation of his parents before he flew out to Ahmedabad.

“When they were back home, the first thing that they did was a CT scan. And that’s when it came about, the CT scan showed that with mum’s remains, there were further remains there too.

“I don’t know what they were. I don’t know how many.”

Miten’s parents’ funeral was attended by hundreds. His father, Ashok, was a financial adviser and his mother, Shobhana, was a retired microbiologist.

As the eldest son, organising much of his parents’ farewell fell to him. The concern around his mother’s remains delayed the family’s chance to grieve.

“I think there should be a level of responsibility taken. Why did that happen? Where was the flaw in that process? I mean I do understand that whole situation, people were rushing, people were very tired.

“You know, to get all the remains, then having to separate them by DNA, it’s a long process. But really, for us as loved ones, it is very upsetting.”

Indian government spokesman Randhir Jaiswal previously said the country was “working closely with the UK side from the moment these concerns and issues were brought to our attention”.

“In the wake of the tragic crash, the concerned authorities had carried out identification of victims as per established protocols and technical requirements,” he said. “All mortal remains were handled with utmost professionalism and with due regard for the dignity of the deceased.

“We are continuing to work with the UK authorities on addressing any concerns related to this issue.”

The flight crashed moments after take-off en route to Gatwick, killing 241 people on board. Horrifying images were beamed around the world within minutes.

Confusion and fear spread like wildfire among relatives back in the UK, who immediately tried to get hold of their loved ones.

It was a family member of Komal Patel’s who called her after seeing the images on the news.

There was only one flight out of Ahmedabad back to London that day, and she had only just been texting her brother Sunny and his wife Monali, who’d been on holiday.

The events of the past few weeks have been unfathomable.

In her first interview about her brother and her sister-in-law, Komal explains how she flew out to India with her cousin Jina to go and identify her little brother.

“Because we weren’t really allowed to see the body, I don’t think I’ve really come to terms with it. I still think I’m dreaming and it’s not really real,” Komal tells us.

Sunny and Monali Patel were in their 30s and about to celebrate their 10-year anniversary.

The couple were the “light” and “soul” of their families.

They loved having fun, playing with their nieces and nephews and adored travelling. Komal says her brother loved barbecues and her sister-in-law worked with children and adored hers too.

“They’re just really fun, exciting, really lived life, just made memories, just made everyone really happy,” says big sister Komal.

“They were like the heart of my kids. Whenever they walked into a room, they just filled up the room with laughter and happiness.”

The couple had been due to fly back home to London a week beforehand but postponed their flight.

“It has just been very traumatic, very, very sad for us, losing Sunny and Monali at 39 years old,” says their cousin Jina.

“They were full of life and brought so much light into our family. As a family, we’re devastated at why two people so young, with so much energy, who brought so much into our families have just sort of gone in one day.”

A joint funeral for the husband and wife was held a fortnight ago and like hundreds of families impacted by this tragedy, the family are now rebuilding a foundation that has been shattered.