Overpayments (Introduction)

Tax credits are based on claimant’s household income and personal details for the whole of the tax year. If the claimant tells us about a change in income or circumstances, we work out the revised amount of tax credits for that tax year. If the change results in them being entitled to less tax credits overall, then there may be an overpayment. An overpayment can happen if, for example

  • A claimant delays telling us a change in their circumstances
     

  • We delay recording a change of circumstance a claimant told us about
     

  • A claimant’s income as a whole for 2005 / 2006, or an earlier year, is £2,500.00 more than their income for the previous year
     

  • A claimant’s income as a whole for 2006 / 2007, or a later year, is £25,000.00 more than their income for the previous year  
     

  • A claimant’s award was not based on the right details

To help stop overpayments occurring, we expects claimants to

  • Provide us with accurate and up to date information when they make their claim
     

  • Tell us promptly about any changes that may affect their award

However, if a claimant receives an overpayment of tax credits we will make every effort to recover the overpayment

How will we expect claimants to pay back an overpayment?

We will collect an overpayment back by one of the following methods

  • If a claimant is still receiving tax credit payments, as the same household for which the overpayment arose, we will automatically reduce the amount we pay them, at a rate dependent on their personal circumstances

Or

  • If a claimant is no longer entitled to tax credits or if the overpayment arose on an award that has ended because their household has changed, we will ask them to make a direct payment

In what circumstances will we write off an overpayment?

The claimant may dispute our decision to recover the overpayment. If a claimant disputes, you will have to decide

  • If the overpayment can be remitted in full or in part

Or

  • If recovery of the overpayment should continue

For us to be able to remit an overpayment, the claimant must be able to show that the overpayment happened because

  • We made a mistake

And

  • It was reasonable for them to think their payments were right

This section of the manual gives guidance on how you should

  • Calculate the amount of overpayment to be remitted
     

  • Explain to the claimant that you intend to recover or remit the overpayment

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