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Tax Credits stopped due to overpayment

(15 Posts)
lougle Fri 03-Feb-17 10:28:22

I'm not sure what to do. Well of course I know what to do, look at outgoings, pare them back, etc., but in terms of the tax credits....I'm usually the one advising other people!

I started working last year. I was previously DD's carer. I stopped being eligible for carer's allowance because I worked. We always work in year with tax credits. We keep them informed. We never have overpayment, always under.

This year, it seems that our part year income from last year, where I'd started work mid way through the year, has transferred over to the following year. I'm pretty meticulous with these things, and I'm pretty sure I would have put an estimate based on a full year's income into the system for this year, but I can't prove it - I renewed online. Consequently, we've been receiving tax credits in the assumption I'll be earning about half of what I am earning.

Fortunately, DH had a minor change of circumstances, in that he got a promotion (but is in a badly paid public sector job) and increased his hours by 6 hours per week. That prompted me to phone HMRC and update them. That's when it came to light that they had my earnings down as £7k vs £16k.

Yesterday they said 'your overpayment is £1500. We've recovered £230 by not paying you the payment you should have had tomorrow. We won't be paying you again until April. Then we'll pay you half of what you should be getting for 4 months, then we'll start paying you normally.'

Tax credits represents a third of our income. It's £1000 per month just gone. Aside from the fact that it should only have been £875, which we could cope with, we're going to struggle understatement with that hole in our income.

I'm torn between phoning them and asking them to spread it and soften the blow, or whether to just try and limp through.

I get a good rate of overtime at work. But if I do overtime now, 41% will just worsen the overpayment and 30% will be taken in tax and NI, then 7.1% in pension, so we'll only see 22p in the £, plus I'd have to find child care. Or should I be trying to cram in some shifts to cover the overpayment? I think I'd have to do 227 hours of overtime by the time the deductions and knock on overpayment were covered, so 18 shifts (we do 12.5).

Everything is complicated by the fact that DD1 has SN and goes to special school. We were better off by me not working, but we wanted to set the girls an example and use my training for good (I'm an Intensive Care Nurse now). I'm sure it will be worth it eventually.

WhoWants2Know Wed 15-Feb-17 14:31:14

Bump for any advice?

Babyroobs Wed 15-Feb-17 14:40:47

Who's fault was it that they had your estimated income down wrongly. Did you not think the amount you were getting was very high considering how much extra income you were getting with you starting to earn? Did you put the £7k income in for your online renewal or did you put more down and somehow it wasn't acknowledged on their system? if you can prove it was HMRC's fault then you may be able to negotiate a repayment plan over a longer period perhaps? Good luck.

Tomsdottir Wed 22-Feb-17 00:07:35

I'm sorry to hear about what must have come as a real shock, and is clearly causing hardship for you and your family. If HMRC are making deductions for an overpayment in the same year that it occurred , they may reduce or stop your payments altogether. HMRC will only pay your estimated entitlement ( that is, if you are still entitled to any) for the remainder of that tax year (here, April 6th 2016 - April 5th 2017) in order to prevent the overpayment increasing. This means that "in-year" overpayments can be recovered at 100%. If this leaves you in hardship, especially if you have children and your CTC has been reduced to an amount you cannot live on, you can request urgent additional payments. HMRC says that hardship requests should be dealt with within two days. If hardship is accepted, reduction rate should drop to:

10% if you are entitled to the maximum award of tax credits (for example if you are on a qualifying benefit such as income support or income related ESA) or have income below a particular threshold;

25% if you are entitled to less than your maximum amount of tax credits;

50% if your current estimated annual income is over £20,00. This figure can be further adjusted if recovery at this rate would still leave you in hardship.

Your local CAB/advice centre may be able to help you with your request.

WhoWants2Know Wed 22-Feb-17 07:32:44

I'm about to have the same thing happen and I'm so terrified. I messed up and forgot to update when my childcare costs reduced and only realised it now when an enquiry form has come through. I literally won't be able to pay my rent or for food if they stop payments. I'm just sick with it and been crying for a week. I also realised I should have been claiming housing benefit because my income is so low. I'm self employed and I've struggled to work so often that my income has been tiny. I'm so distressed about it that I can't even function anymore, and if it weren't for my kids I would want to die

lougle Wed 22-Feb-17 07:36:13

Thank you. Babyroobs, I'm not sure whose fault it is. I'm usually very meticulous about this sort of thing. I'm the annoying person who actually does read the small print, etc., and if you advanced searched my posts, you'd find many posts where I have been able to tell posters how much tax credits they are entitled to down to the penny because I know and understand the formulas and how to calculate them. I know the decision makers guides pretty well, know the regulations, etc.

I used the beta online renewal last year and it asked for my estimated income for this year. I'm pretty sure I would have stated my whole year base income (approx £13,400). I'm suspicious that the system overwrote my input and reverted to previous information because it has last year's half-year income and half-year carer's allowance, and I didn't receive any carers allowance at all this year and wouldn't have expected to. However what I do know is that I wouldn't have appreciated the impact of the level of unsocial hours payments on my income at the point of renewal (we do about 50% weekend and 50% night shifts), and we had no idea DH would be getting a promotion and an increase in hours, so either way we would have had some overpayment.

We've decided that although we could phone and ask them to reduce the deductions, we'd rather just try and weather the storm and get through until April living as simply as possible so that we don't have a debt hanging over us.

lougle Wed 22-Feb-17 07:40:47

Oh whowantsflowers Get your claim for housing benefit in today because they don't backdate. Then be brave and tell tax credits. How far have your childcare costs reduced? How old are your children? Would you be better to get an employed job?

Babyroobs Wed 22-Feb-17 10:09:45

Unsocial hours payments are a nightmare to try to estimate. I remember many years ago when my children were very young and we claimed tax credits for a short while we ended up with a huge overpayment as I could never predict how much I would earn ( Nursing). Mywages could vary by £200 - £300 a month .They let us pay back over 3 years but it sounds like the way they do things now has changed a bit. Hope you manage to get it sorted without too much hardship.

lougle Wed 22-Feb-17 11:40:38

Yes it's nursing. It's hard to estimate because we get Time + 30% for weekday nights and Saturday days. Then we get Time + 60% for Sundays/ bank holidays, but only from midnight to midnight, so if we do a Saturday night shift we get 4 hours at 1.3x and 7.5 at 1.6x..... added to that we do 50% nights and 50% weekends, but obviously sometimes the nights and weekends coincide, so we end up with something like 1/8 Sat nights, 1/8 Sunday nights, 1/8 sat days, 1/8 sun days, 1/4 week days, 1/4 week nights. But that's not set in stone, so it's a complete nightmare to work out a salary.

WhoWants2Know Wed 22-Feb-17 13:30:35

I have the housing benefit form ready to print, but probably not enough ink to print it. And even more fun, I booked an appointment with the GP because I'm having a bloody breakdown over this-- and the car won't start. I give up.

LovelyBath77 Wed 22-Feb-17 16:13:33

Tax credits have an online chat facility which I found helpful in the past- maybe you could ask them on there? I just found it on the tax credits website.

LovelyBath77 Wed 22-Feb-17 16:14:55

Also it seems to me like they could spread it out longer. I missed out telling them about ESA as didn't realise was income (CB) a couple of years ago and was 6K more income and had an overpayment..but they took it back over around a couple of years I think. It;s a bit much to stop it like that

heavenlypink Wed 22-Feb-17 16:28:11

Tax Credits are a necessary evil 😡 I'm done with them now due to DS age but they caused me many sleepless nights - especially the last 4 years - as OH was/is on a zero hours contract and my hours/income could vary throughout the year. I will have one last declaration to deal with and I'm hoping I won't be owing them money.

Also, if you need to ring try first thing on a Saturday morning, I've usually got straight through then, after navigating the all the options.

LovelyBath77 Wed 22-Feb-17 19:55:41

They just sent us a letter today confirming last years income (to 2016) and is as an estimate etc hoping it is Ok you never feel you know where you are with them

welshgirlwannabe Thu 23-Feb-17 12:40:14

I was over paid by about £800 a few years ago... never did completely understand how or why but just accepted that it happened and I need to repay. I asked to spread it over the maximum time thet would allow so alllowm currently paying around £17 a month. I'm not paying interest on this debt and if we had to pay it back any quicker I would have struggled. IME it's worth asking what your repayment options are as they didn't offer to spread the sum, but agreed without hesitation when I asked.

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