Tax credits: What to do if you get a tax credit overpayment

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Claimants of tax credits receive the payment from the Government because they have been deemed eligible for extra financial support. Claimants of either Working Tax Credit and Child Tax Credit receive regular tax credit payments while claiming, but mistakes do happen and overpayments can be made.

Why might you get a tax credit overpayment?

There are a number of reasons why someone may be overpaid tax credits.

One reason is there is a change in the claimant’s circumstances.

Anyone claiming tax credits needs to report any changes to their circumstances as soon as possible.

This includes anything such as any changes to employment status and salary.

But the rule also applies to changes in personal circumstances, such as changes in living circumstances or childcare.

HMRC should be informed straight away if there are any changes to personal circumstances, to help prevent overpayments which will need to be paid back.

Even if the claimant has reported the changes to their circumstances on time, they may still find they have been overpaid tax credits.

Another reason why a claimant may be overpaid tax credits is if they or the Tax Credit Office make a mistake.

Someone may also be overpaid tax credits if they do not renew their tax credits on time.

If someone suspects there is a mistake with their tax credit payments, the Government website explains they should call the tax credits helpline.

Details of how to contact the helpline are listed on the tax credits general enquiries web page HERE. 

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How do you pay back tax credits?

The Tax Credit Office will write to claimants to let them know how much they have to repay.

Claimants who are still in receipt of tax credits will see their future tax credit payments automatically reduced until the money is paid back.

This is also the case for tax credit claimants who have moved onto Universal Credit.

People who are no longer claiming either benefits will be given a notice to pay from HMRC.

Repayments can be spread out over a longer period if people are facing problems financially.

It is also possible to dispute a request to pay back an overpayment if a claimant doesn’t agree with the decision.

Citizens Advice explain: “If you have a tax credits overpayment you must pay back, you should deal with it as soon as possible.

“While having to pay back money can be worrying, there are lots of ways to pay HM Revenue and Customs (HMRC) – including in instalments.

“If you’re disputing paying back the overpayment, you might still need to start paying HMRC back. You’ll get this money back if your dispute is successful.”

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