 |
access key options 
skip navigation what's new home site map search
disability benefits consortium home page
about us | benefits | contact us | frequently asked questions | links | make a donation | membership | publications | tax credits | what we do | what you can claim
Overpayments of Tax CreditsThe amount of tax credit paid in a particular year is usually an estimated amount based on the previous year's income and adjusted finally, at the end of the tax year, once the income for the year is known.
There is a built-in £25,000 disregard, which means that as long as your income for the 2007/2008 tax year is not £25,000 more than your income for 2006/2007 you will not incur an overpayment. If your income reduces at all you will be underpaid and the amount will be reimbursed in a lump sum to you.
Awards can be adjusted in-year when changes occur and this can reduce or eliminate an overpayment.
However, it is only when your entitlement is finalised at the end of the year that the final overpayment is known.
The Revenue's approach to overpayments is outlined in COP26 - the Code of Practice on overpayments.
There are two situations where the Revenue may allow you to repay the overpayment over a longer time period than normal (possibly using top-up payments to extend the payback period), or may decide not to seek to recover the overpayment at all:
The COP26 lists factors, which can be taken into account when considering hardship, and includes claimants with a disability whose health could be affected by having to pay back the debt.
Other factors which can be taken into account include income and essential living expenses, your savings, outgoings such as rent or mortgage repayments, whether you have a child under five-years-old, and any other factors that may be relevant.
Note: Problems with tax credit overpayments can have an adverse effect on benefits such as income support and housing benefit. If you are on these benefits, seek further advice.
If you think your Tax Credit has been wrongly calculated you can appeal. See our web page "If you disagree with your tax credits decision".
Note: You cannot appeal against a decision to recover an overpayment of tax credit, only against a decision about the amount of tax credits you are entitled to, or whether you were entitled at all.
The Adjudicator's Office handles complaints about Tax Credit Office mistakes, delays, poor or misleading advice, inappropriate staff behaviour and the use of discretion.
In its spring 2007 Departmental Report, HM Revenue and Customs (HMRC) announced that it will undertake an independent review of decisions to recover overpayments caused by official error.
"Following discussions around the feasibility of introducing an independent review of HMRC decisions to recover overpayments caused by official error, HMRC and the Adjudicator plan a pilot in the summer of 2007 with a proportion of cases being offered this new service. If a claimant disputes the recovery of an overpayment and, after review, we conclude it is recoverable under the Code of Practice 262, we will give the claimant the option of having this case reviewed by the Adjudicator by a fast track process. This will be an alternative to the current procedure where the claimant then has to make a formal complaint about the handling of their case, and that case has to be first reviewed as part of the Department’s complaint handling procedures." (Page 25 of the report)
HMRC also intends to introduce automatic limits on the rates of recovery of overpayments, where awards are adjusted in-year and result in reduced entitlement, by June 2007.
Note: for pdf files you will need to download adobe acrobat reader. To convert the pdf to alternative formats or for more information on accessibility go to access adobe.
