Dp promoted and now we owe tax credits

[hatofhope]

Please don't bash me, I'm not in anyway disputing or trying to get out of paying what we owe. Just trying to get my head round it really. Others experiences would be helpful to hear.

Anyway, DP got a promotion at the end of November last year which of course meant an increase in his wages. I informed tax credits just after Christmas with a new estimated income.

They've sent us back our new award and as we now owe them our payments have stopped until April which is fair enough. But the amount we owe seems quite scary. Even after 5th April we will still owe over £3k.

I have no idea how they work it out or even if I worked out dp's estimated wage for the year out correctly when filling the form in online, but either way it's a lot to owe. I had a quick look on the hmrc website about tax credits overpayments and it said if we still qualify they will take an amount or the full amount until it's paid back - fine. However if we no longer qualify for tax credits in the new tax year then they will want the full amount paying back. We don't have that sort of money lying around to pay back in the first place. It did briefly say that we could call them to arrange a repayment plan but I'm so scared/confused that we owe so much just because dp worked hard and got a promotion.

I'm really grateful for the help we have received through some hard times and I'm not disputing the amount that we owe as it's obviously in relation to our household income but I find the whole system so confusing with the way they base payments on the previous year's income (which was significantly lower compared to now) yet if you report any changes in income they base it on an estimate for the current year? It seems like if you find yourself getting a significant increase in wages through the year then you'll end up owing them even if you inform them on time.

I have every intention of paying the money back, I think we will still qualify for a small amount of tax credits, but whether it comes out of future claims or if we have to set up a payment plan it's going to take a long time for it to be cleared and the thought of having that hanging over me for the next few years makes me really anxious. I guess this is just the way it works?

I wonder if they have taken your dh new earnings and put that figure down for a whole year rather than half a year?

I would suggest you phone them, talk to them and get a clear picture of where the overpayment has come from.

We are currently paying off a small over payment caused by dh getting a pay rise. (In effect we have no payments until April!)

Thanks for the quick reply, dp wondered that too now you mention it. I think giving them a call is a good idea. I don't mind paying back what we owe but it's just so much and I don't really understand it.

We got a similar letter and I couldn't understand how we owed so much, and yes it's scary to get that! We didn't qualify anymore so I phoned them up and I could choose how much I paid back. I said £25 a month and they accepted. I think they have to accept whatever you can afford.

Thanks spooky, it is scary isn't it! I think we'll still get a small amount of tax credits which will obviously go straight to them which is fine but it's going to take a long time for it to be cleared. I'm wondering if we could pay back a little extra on top of what they take from the TC so it's not hanging over us for so long.

My mum just had this. Your letter should say what your new earnings are but there should be a figure for what they've estimated your earnings to be and based the award on. My mum's is really overestimated and says she might owe money - she won't though as her earnings will be nowhere near that much.

I will sit down later and have a proper good read of the letter to try and make sense of this.

Now it's had time to sink in I'm starting to worry a bit I've never been in debt before and I don't understand how we can owe this much when we informed them of all relevant changes on time. DP started a new job last March with an increase in wages and we didn't owe anything then so this was unexpected.

We had this but they want nearly 7k!
I phoned them after dh's income increased as we were expecting payments to stop. They told me over the phone we were still entitled to the money as it was done on last years income, which as we didn't qualify for 18 months when on a really low income after dh lost his job seemed stupid but understandable. We are trying to contest it but there isn't much in the way of an appeals process. The whole system in ridiculous

Many years ago we reached a point where we no longer got any tax credits and they sent demand letter for £900+ back to be paid within a few weeks. We could not pay it and asked to pay it back at £25 per month over 3 years. HMRC were fine with this so hopefully you can come up with some sort of repayment plan. the thresholds are roughly £26k for one child, £32 for two ( without childcare costs) so if your income exceed these threshold you will no longer be entitled.

Been there worn the tshirt, mentioned it on the boards a couple of times.
Apparently the system pays you from April based on your earnings to the following April. If at any point you exceed the threshold you will have payments stopped but you will owe them for any payments received during that year.
So you will being asked to pay back all credits you received from April until the stopped paying you at Christmas.
I had many an argument with them with the general consensus being if you get promoted/new job do it in April!
It's not a debt recorded against your credit files etc and I only pay them £25 per month.

Thanks baby i think we will be just under the threshold for 2017-2018 when taking dp's basic wages into account, but he also does over time occasionally, which will no doubt push us over the threshold as the year goes on. To be honest I'll be glad when we're no longer entitled to claim from them anymore, the whole system is a complete minefield. Been reading about other peoples similar circumstances online and it seems this is quite a common thing. No wonder some people choose to stay on benefits or in low paid jobs rather than trying to move up the ladder, it really is a 'trap'.

If you get promoted/new job do it in April!

If only the rest of the world worked like that

It does seem like you get penalised for bettering yourself under this system. Dp is going to call them at some point to try and make sense of it but I think our best bet is to wait till April when we get a p60 and go from there. At least like you said it's not a debt that goes on your credit file or anything so that's something. £25 a month would be totally manageable for us, it's the length of time it will take to be paid off that's most annoying.

foamybananasweets "We had this but they want nearly 7k!
I phoned them after dh's income increased as we were expecting payments to stop. They told me over the phone we were still entitled to the money as it was done on last years income, which as we didn't qualify for 18 months when on a really low income after dh lost his job seemed stupid but understandable. We are trying to contest it but there isn't much in the way of an appeals process. The whole system in ridiculous"

Exactly the same situation we are in. The minute dh's income increased, I phoned them. We had a new award and were still being paid, I queried but was told "it is based on last year and you are owed this money". It didn't make sense! We then got a notice of overpayment of 5K! We managed to pay back half the money as a lump sum (from kind relatives) and paying the rest back monthly. We should have it paid off by August but it's been a big struggle. I am going to insist we have our application cancelled the minute it is paid off, I can't be in this situation again.

Same here. Years ago though. It's one big fucked up system that im glad to be out of.

I think I ended up owing about 2k. I offered £10 a month and told them if they didn't accept I'd bankrupt myself so they wouldn't see a penny They accepted it no problem, but I'll be paying for about 10 years I don't even notice it leave my account, whereas if they'd demanded it all back in one go I'd have really felt it.

It's such a ridiculous position for people to be put in.

We're in a similar situation. We did get a quite large tax credit award. I wasn't working and was caring for DD1 (SN), then last year I went back to work half way through the year. Somehow, our renewal on the beta online renewal system in April 2016 kept my estimated income for this year at last year's rates. I know I wouldn't have entered those figures, because it included an amount for Carer's allowance and I wasn't getting it by then, due to my income. But I won't be able to prove it because all you get is the confirmation code.

That, added to the fact that DH had a small promotion and a 6 hour per week increase in hours, has lead to an overpayment and our tax credits have just been stopped dead.

Just resurrecting and old thread to let you know that after a year of denying any wrongdoing and threatening us with bailiffs, that HMRC have finally listened to their recordings of the calls we made and have admitted that we did notify them on the change in earnings correctly, that we were given the wrong information and that we weren't at fault. They have cancelled the 7K debt they said we owed them. We had to complain to mp as there wasn't a formal complaint process. I so nearly offered to enter Into a repayment plan as the threatening letters were so stressful to deal with (am on anxiety meds as a result). So glad dh insisted we kept fighting!

my goodness all that fuss foamy and all they had to do was listen to voice recordings what a waste of time and money

I know 😟 They were bullying us to cover up their mistake. And because the appeal process is nonexistent it's so hard to get them to look at the evidence. Citizens advice were no help, it took writing to the mp to make someone listen!

So glad it's over for us, but I know that many other people are in the same situation and wanted to share our experiences