To think this is DISGRACEFUL! Massive tax credits overpayment!

[CrumblingKnees]

Just furious that common sense is not prevailing and I am essentially being robbed of money by HMRC!

So, twin DC finished education in summer 2021. Both have a disability, DH works but we were entitled to tax credits as wage not massive and we got the higher rate due to disability. I remember getting a letter saying tax credits would stop from August 31st due to this. Was aware and knew I’d have to find a job to cover the shortfall.

Payments stopped and I then started working in November 2021. I do remember getting some letters from them but ignored as as far as I was concerned claim had ended (stupid I know). Youngest was diagnosed with a serious illness last summer and I’ve been a bit of a mess, not keeping on top of things like I normally am.

Anyway got a letter from them a few weeks ago saying we’d been overpaid almost £2,000! Shocked, rang and basically they’d added on my work income from November onwards to my tax credit claim for that year (it was not closed). I assumed claim had ended in August and if it had been there would be no overpayment!

I’ve explained this and filed a dispute. They’ve come back today and said that as I didn’t dispute before the end of Jan the overpayment stands and we need to pay it!

AIBU to think this is a pisstake and totally wrong for a government agency to take money from families like this?

Pay it back at £5 per month if you are worried about it- tell them that’s all you can afford.

They won’t do anything - they can’t. They’d have to take you to court and provide evidence etc, which they don’t - they send these letters out Willy-nilly and most people ignore them and after about 6 years they stop trying.

People on here will try to scare you and tell you untruths but the fact of the matter is they don’t have the resources to chase people for the money!

If they have inherited such a large sum of money that they are able to accrue a substantial level of interest in a short space of time as to mean they receive more than they are entitled to.
I do not have a problem with them being required to pay it back 😐

Which they would have to do

but you think they should be exempt?

Tax credits are calculated by assessing income from tax year which runs from April-April over a year. If by starting work in November your average income increased by £2500 or more that Tax year there will be an overpayment.

No not exempt, but there are grey areas imo.

Wow, why are so many people on here so bloody desperate to put the boot in all the time?

OP it was NOT your fault. You did absolutely nothing wrong. Why on earth would it occur to anyone they were being overpaid when they weren’t claiming anything? You would have to have a very clear knowledge of how tax credits work in order to realise this, and why should you? I’m assuming you don’t work for HMRC like half the posters on this thread clearly must do. And not reading their letters? Well what with all the crap they send out that’s wrong or pointless, or just plain impossible to decipher, that’s completely understandable.

Unfortunately you have little chance of appealing this, but you can negotiate an affordable amount to repay. Offer them a tenner a month. Horrible system, it makes my blood boil.

Feel better now?

Blimey. The very idea of savings is so foreign to me that it is laughable. But still the digs about having five children and thinking it seems unfair that only two get tax credits. I’m not asking for unfair handouts - I’m pointing out the inherent unfairness in the system. As I said, we get by. The unfairness is still there, despite the “ceiling” on children - because people are allowed a decent amount of savings and can still claim. Whereas some, like us, have no savings at all. And the same limits on the tax credits.
it’s ridiculous to keep going on about us having kids after the rules changed - who here seriously makes decisions like bringing new life into the world according to the whim of the latest chancellor or inept government? I mean, really? That’s like inviting a cabinet minister into my bedroom practically - leaning over my bed checking we’ve got the contraception all sorted thank you very much.
there's so much injustice baked into the system it seems silly to defend this one fairly minor point as if it’s an anomaly. We rent - and have to pay vastly more than friends and relatives who are eligible for mortgages because they have more income - how is that fair? We pay huge amounts of rent and hence the tax credits are a necessity. Yet we have to rent because we don’t want enough to be ok’d for a mortgage. If we could get a mortgage and pay less on housing we’d be able to make more of a go of things. But there’s very little recourse for renters. We have been evicted twice because the landlord simply decided to sell.
so talking systemic injustice could go on forever - acting like every family with more than two kids who feels the tax credits system is unjust is just a stereotyped freeloading low IQ, socially callous set of people trying to live off of everyone else is disastrously myopic and narrow minded.

it’s ridiculous to keep going on about us having kids after the rules changed - who here seriously makes decisions like bringing new life into the world according to the whim of the latest chancellor or inept government?

you think it is ridiculous to examine your financial situation and whether or not you can afford another child at least fairly comfortably?

We rent - and have to pay vastly more than friends and relatives who are eligible for mortgages because they have more income - how is that fair?

they have more income to save because presumably they don’t have 5 children

Yes. How awful that people should pay for their own children rather than be subsidised by tax payers.

If I had 5 children… I would also be renting and it would be unaffordable for me to save to buy

I don’t though. I have 2, which allowed me to save.

You seem quite surprised that having more children goes hand in hand with increased expenditure

This was an excessively long post that could be summarised by two phrases: "I want" and "I don't want".

And thankfully the government finally grasped this mentality back in 2017

They calculate the amount of tax credits based on the previous year's income, but if you have a big change (>£2.5k) they will recalculate if you ask them to. Tax credits in payment in the current year (22/23) will be based on income in the 21/22 tax year. But the award is provisional and subject to revision, because it's basically a guesstimate.

After the tax year ends on 5 April, and as pay data from the year end comes in, they start revising the provisional awards for the previous tax year. If a tax credit claim is still running, they will adjust the payments for 23/24 to take account of any over- or underpayment. If the claim has ended, they will issue a payment for any shortfall, or an overpayment notice.

It may seem unfair, but that's how it works. When TC's started (2003 or thereabouts), there was no direct reporting of income to HMRC like there is now, so in-year adjustments based on changes in earnings couldn't be made. They won't revise the way TCs work now, because the number of TC claims is getting smaller and smaller as people move over to UC.

That's why tax credits are being phased out. Most people have already migrated to uc. You haven't been able to make a new tax credits claim for a few years now. By 2024 tax credits will cease to exist.

The tax credit system is SHITE. I've seen people saying that it's based on the 'tax year', but it's based on the previous tax year! It's so bloody complicated, especially if your income changes in any way, like yours has.

It has to be based on the previous year, because the current year hasn't ended yet, current year's earnings are not yet known and HMRC don't have a time machine!

About what? OP asked a question. I answered. It's very straight forward with no grey areas at all.

When I've had to speak to them on behalf of clients, I've always found them to be bloody helpful, far more than most DWP departments.

The extent to which they can be pragmatic is limited by regulations. They have to stick to the law because it's the law! But I've known them to be pretty pragmatic, too.

I once supported a couple who had a very volatile relationship and were always splitting up and getting back together. One day, I helped the mum phone HMRC to close her joint claim (again) and start her single claim (again). The guy on the phone must have looked at the claim history, because he suggested, very calmly, that maybe it would be a good idea to leave it for a couple of weeks in case they got back together again. Technically he was wrong, that's not what the rules say, but his pragmatic approach was right and they were back together within the week.

basically, these policies end up hindering as much as helping and it should all be simpler and clearer, and, yes, fairer.

That would be wonderful, @thismamayogi . Perhaps you'd like to make a start on devising a simpler, clearer, fairer benefits system, and suggest it to Mel Stride?

UC was meant to be all of those things and they've had to make numerous changes since its introduction because many things didn't work and weren't fair. And it still isn't fair, because a lot of things are "at the discretion of the work coach", and no two work coaches seem to exercise their discretion in the same way.

It makes my job very hard, because often I genuinely can't advise clients what will happen in some circumstances, I can only say what might happen; people don't have any certainty.

I would check out the legal position. Many years ago taxcredits overpaid me £7000 and almost instantly recognised their error to advise me of this but saying they were not allowed to reclaim it because it was their error.

@fUNNYfACE36
Op has not been overpaid. Her tax credits were based on her DH predicted wage for the year . Op stopped claiming , she subsequently got a job so the household income for that year was higher.
Had op not of started working she would of been fine but tax credits look at a year .

The irony of your comments is that the single most judgemental comment on this thread is yours @thismamayogi

if full time mothers were not penalised for making a choice to raise their own kids full time, perhaps the poverty of the same wouldn’t be an issue.

I’m shocked that you can call other judgemental while saying stuff like this. Tell me more how I’m not a full time mother… who exactly is being a mother to my child while I work? Or do you think she’s motherless while I’m at work? Do you think the same things about fathers?

@LakieLady
Thank you.

I actually explained in my next comment that I meant SAHM or housewife but only used the phrase full time mother as housewife usually receives a lot of comments - of course every mother is a full time mother - that is a language faff, not a judgement - i of course am
bot judging mothers who work outside the home as they also work as hard as any other mother - both my sisters work outside the home and I did clarify this in my next remark. So that is not a judgemental comment just an unwise use of langauge as I feel SAHM also garners so many negative comments.