DWP to Refund Nearly 200 Benefit Claimants Up to £5,000

Nearly 200 benefit claimants are set to receive refunds from the Department for Work and Pensions (DWP) after a review found that Administrative Penalties had been wrongly issued in a number of cases between 2023 and 2025.

The DWP confirmed that 197 claimants were affected, with individual penalties ranging from a minimum of £350 to as much as £5,000.

What Are DWP Administrative Penalties?

Administrative Penalties, commonly known as “Ad Pens”, can be offered to benefit claimants who are suspected of fraud as an alternative to criminal prosecution.

According to the DWP, these penalties should only be used when available evidence indicates there is a realistic prospect of securing a conviction.

However, an internal review found that this standard had not been met in several cases.

197 Incorrect Penalties Identified

The DWP identified a total of 197 cases where Administrative Penalties should not have been issued.

This included:

• 128 cases from 2023/24
• 69 cases from 2024/25

Some penalties were imposed despite insufficient evidence to support a likely conviction, while in other cases officials had not fully considered the individual circumstances involved.

The affected cases represent around 23% of claimants who accepted Administrative Penalties during the period covered by the review.

Claimants Could Receive Refunds of Up to £5,000

The DWP has confirmed that the wrongly applied penalties will be removed and refunded.

Administrative Penalties can be worth up to £5,000, while the minimum penalty is £350. The exact refund received by each claimant will therefore depend on the amount originally charged.

The department said it carried out the review proactively to identify areas where its procedures could be improved.

Affected claimants will be contacted directly by the DWP.

Benefit Overpayments Will Still Have to Be Repaid

Although incorrectly imposed Administrative Penalties will be refunded, this does not automatically cancel any underlying benefit overpayment.

Claimants who still owe money because they received more benefits than they were entitled to will remain responsible for repaying that outstanding amount.

The refund applies specifically to the Administrative Penalty that was incorrectly imposed.

DWP Changes Administrative Penalty Procedures

Following the review, the DWP has introduced measures designed to make future decisions more consistent.

Changes include updated guidance for investigators and the introduction of an independent decision-making panel.

The number of Administrative Penalties has also fallen significantly, with only 68 issued during 2025/26.

DWP Continues Benefit Fraud and Error Crackdown

The refunds come while the government continues efforts to reduce fraud and errors across the welfare system.

Fraud and error were estimated to have cost around £9.9 billion during 2025/26.

Under the Public Authorities (Fraud, Error and Recovery) Act, the DWP is also expected to receive additional enforcement powers from October.

These include powers that can require banks to provide certain financial information, allow money to be deducted directly from accounts in some circumstances, and enable driving bans to be imposed in certain cases.

The measures have attracted criticism from campaign groups. Civil liberties organisation Big Brother Watch has argued that the expanded powers could result in an unprecedented level of financial surveillance.

The government, meanwhile, says its wider fraud and debt-recovery programme is intended to save around £14.6 billion over five years. Around £400 million has also been allocated to create 3,000 additional jobs covering areas including data and investigations.

The DWP’s review means 197 benefit claimants will have incorrectly imposed Administrative Penalties removed and refunded, with some refunds potentially reaching £5,000.

Those affected will be contacted directly, although any legitimate benefit overpayments will still need to be repaid. The department has also strengthened its procedures in an effort to prevent similar errors in future.