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Repaying overpaid tax credits

Repaying overpaid tax credits

If we've paid you too much in tax credits you may have to pay back the extra money. We'll either reduce your current payments if you're still getting tax credits, or ask you to make a direct payment - a one off payment for the full amount. Either way help is available if you can't afford to pay.

If you're still getting tax credits

If you're still getting tax credits, we'll reduce your ongoing payments to get back the overpaid amount. However if you're no longer entitled to tax credits, or you've made a new claim after splitting up with your partner, we'll ask you to make a direct payment - a one off payment for the full amount.

Reducing your payments

If we've paid you too much in this tax year - or a previous one - we'll automatically reduce your ongoing payments until you pay back the overpaid money.

The amount we reduce your payments by depends on whether you get tax credits in full, or at a reduced rate. We make this decision based on the information you gave us about your income. The higher your income, the more your tax credit payments are reduced.

Check your award notice to find out if you get tax credits at a reduced rate. If you do, it's shown as 'reduction due to your income' in part 2 - How we work out your tax credits.

If there's no reduction shown - because of your low income, the most we'll take back from your ongoing payments is 10 per cent.

If you do get a reduction - because you have quite a high income and only get the family element of Child Tax Credit, we'll take back up to 100 per cent from your ongoing payments.

For everyone else we'll take back up to 25 per cent from your ongoing payments.

Example 1

You are currently getting the maximum amount of tax credits with no reduction due to income. Your tax credit payments were £2,613 a year, or £50 a week. We will reduce your payments by 10 per cent - so you'll still get 90 per cent of your money. Your new payments will be £2,352 a year, or £45 a week.

Example 2

You are currently getting the family element of Child Tax Credit only with a reduction due to your income. Your tax credit payments were £545 a year, or £10.43 a week. We will reduce your payments by 100 per cent - so you'll get no more money until the overpayment has been paid back.

Example 3

You are currently getting Child Tax Credit and Working Tax Credit with a reduction due to your income. Your tax credit payments were £1,046 a year, or £20 a week. We will reduce your payments by 25 per cent - so you'll still get 75 per cent of your money. Your new payments will be £784.50 a year, or around £15 a week.

If you need help to understand how your payments will be reduced, call the Tax Credit Helpline on Tel 0845 300 3900 or textphone 0845 300 3909.

You can make extra payments if you want to clear your overpayment more quickly. To do this call the Tax Credit Payment Helpline on Tel 0845 302 1429.

If your reduced payments are causing you financial difficulties

If you can't meet your essential living expenses such as rent, gas or electricity bills, we may offer you a longer period in which to pay by changing the rate at which you pay it back. If we do this, it'll take you longer to pay back the overpayment.

Call the Tax Credit Helpline on Tel 0845 300 3900 or textphone 0845 300 3909 to find out what your options are.

Difficulty repaying overpaid tax credits

If you're no longer getting tax credits

You may not be able to claim tax credits for this tax year. This may be because:

your circumstances have changed
you haven't renewed your tax credits
your tax credit award has ended - if, for example, you have split up from your partner

If you've been overpaid and are no longer getting tax credits, we'll ask you for a direct payment - a one off payment for the full amount.

We'll ask you to do this even if you are receiving another award of tax credits for a new household.

Making a direct payment

We'll send you a Statement of Account that gives details of the overpayment. You'll also get a Notice to Pay which includes a payment slip for you to make your repayment. You'll need to pay us within 30 days.

What if I can't pay within 30 days?

If you can't pay us within 30 days, you can arrange to pay back the money over 12 months.

If you still need more time to pay, get in touch with us so we can talk through your options. We may be able to:

spread the repayment over a longer period
put back the date we start to collect the money you owe us

For more information call the Tax Credit Payments Helpline on 0845 302 1429 as soon as possible. We will make a decision based on your circumstances.

Repaying an overpayment if you've split up from your partner

If you live with a partner, you must make a joint tax credits claim, which means you are both responsible for paying back any overpayment. We will write to you both telling you about the overpayment.

If you've split up from your partner you must tell us as soon as possible as any joint tax credits claim will end. An overpayment can't be collected from any new tax credits claim, so a direct payment - a one off payment for the full amount will have to be made. If we do not have an address for one of you, we'll make every effort to find one.

You and your ex-partner can agree between you to pay different amounts. For example:

each of you to pay half
each of you to pay different amounts
one of you to pay the full amount

If this agreement doesn't work, we'll ask each of you to pay half the amount.

You can make a new claim as a single person or with a new partner but you must contact us to do so. We can't reduce your new claim payments to collect back an overpayment from an earlier award. You will have to make a direct payment - a one off payment for the full amount.

Tax credits when your partner leaves or a new partner moves in

Contact us

You can contact our Tax Credit Helpline on Tel 0845 300 3900 or textphone 0845 300 3909 (open from 8.00 am to 8.00 pm, seven days a week except Christmas Day, Boxing Day, and New Year's Day).