This guide gives you the payment options for repaying tax credit overpayments to HM Revenue & Customs (HMRC). It also tells you when you might need to make repayments.
If you are still receiving tax credits you can pay back what you owe HMRC by receiving reduced payments from them over the next tax period. If you are no longer receiving tax credits, but have outstanding tax credit payments to make to HMRC, you can use one of the methods described in his guide to make a payment.
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HMRC will send you a Notice to Pay (which will include a payslip) telling you how much you must repay. If you cannot repay the full amount within 30 days please call the Payment Helpline on Tel 0845 302 1429.
HMRC can make arrangements for you to pay it back in instalments over 12 months. You must contact them as soon as possible to arrange this.
It may be possible to repay the amount over a longer term if repaying within 12 months would mean that you are unable to meet essential living costs. HMRC will need to ask for information about your financial circumstances before they can make a decision.
When you make your payment to HMRC it is important that you use the right reference. This makes sure your payment reaches your account and that you won't get reminders after you've paid.
You can find your reference number on the payslip that's attached to the Notice to Pay that HMRC sends you. The reference number is 16 characters, the first eight characters are your National Insurance number, for example QQ123456311204NC.
Make sure you enter your reference number with no spaces between the characters or it could lead to delays in updating your account.
Check your tax credit reference using HMRC's reference checker
HMRC recommends that you pay by Direct Debit because:
Find out about the Direct Debit Guarantee (PDF 21K)
You can set up a Direct Debit to repay your tax credit overpayment by contacting the HMRC Payment Helpline on Tel 0845 302 1429. Before calling the Payment Helpline please ensure you have the following information to hand:
If you're registered to use HMRC Online Services - for example for Self Assessment - you can set up a Direct Debit online. There is no online service for tax credits, so you can't register just for tax credits.
Find out how to set up a Direct Debit online
When setting up your first Direct Debit payment you need to allow at least five bank working days before the date you wish to make your payment.
Bank working days are Monday to Friday excluding bank holidays. If you haven't allowed enough time then you'll have to pay by another electronic payment method described elsewhere in this guide.
Your Direct Debit payment will appear on your bank statement with the description 'HMRC NDDS'.
If you are having difficulty making your Direct Debit payments, perhaps because of a change in your circumstances, please call HMRC on Tel 0845 302 1429 to discuss your options.
You can use your bank or building society services to make a Faster Payment using your online/telephone banking.
To pay your tax credit repayment using any of the above payment methods you'll need to set up the payment details with your bank. You'll need to give them:
This is a service that has been introduced by the banking industry for sending online or telephone banking payments on the same or next day, providing the value of the payment does not exceed the value limit set by the sending bank.
More about the Faster Payments Service
Information about Faster Payment limits (Opens new window)
If your bank or building society offers the Bank Giro service you can make a payment at your own bank branch by cheque or cash.
If paying this way please:
You can find your reference in the reference box on the payslip HMRC sent you.
Please allow at least three bank working days for your payment to reach HMRC. Bank working days are Monday to Friday excluding bank holidays.
When paying by Bank Giro please only use an official HMRC payslip. HMRC payslips contain the correct HMRC bank account information so your payment will reach your account on time.
You can make a payment at the Post Office by cheque, cash or debit card without charge. This is more efficient and secure than sending a cheque by post.
If paying this way please:
Please allow at least three bank working days for your payment to reach HMRC. Bank working days are Monday to Friday excluding bank holidays.
When paying by Bank Giro please only use an official HMRC payslip. HMRC payslips contain the correct HMRC bank account information and ensures payment reaches your account on time.
HMRC recommends that you make your payments using one of the methods covered in this guide. If you use the right reference number electronic payments are generally more efficient and secure.
If you do need to pay by post:
Please allow at least three working days for your payment to reach HMRC by post. This allows for any delays in the post outside HMRC's control.
If you do not have an HMRC pre-addressed envelope, the address for posting a cheque is:
HM Revenue & Customs
Bradford
BD98 1YY
HMRC only accept postdated cheques if you have made an arrangement with the Payment Helpline to spread your payment by sending postdated cheques. Contact the Payment Helpline on Tel 0845 302 1429.
HMRC have automated the way they deal with payments sent by post. So you need to send a covering letter with your postdated cheque. Otherwise HMRC won't know that the cheque is postdated and will present it straight away.
If you pay your tax credit overpayment electronically you will not need a payslip.
However, if you are paying by post and you don't have a payslip, send these details with your payment:
If you have made your payment electronically using one of the methods covered in this guide you can confirm from your own bank or building society statement that payment has cleared your account.
If you pay HMRC by post you need to send a separate letter with your payment to ask for a receipt. Please don't write on your HMRC payslip as they are processed automatically.
Find out more about tax credit overpayments
Get information on what to do if you have problems with your tax credit
Find out what you can do if you have a problem making a payment
