Tax Credits Overpayament

[Ludos]

I'm not sure how it's happened but I've had a letter from tax credits saying I've had a substantial overpayment - something to do with when the claim ended... anyway, they have said they will start making deductions from my Universal Credit and I'm freaking out. I was worried about managing everything on UC to start with, and now this

Can anyone help with how much they are likely to take? I can't find any info.

Can anyone help?

You need to contact the debt management office:

DWP Debt Management contact centre
Telephone: 0800 916 0647
Textphone: 0800 916 0651
Calling from abroad: +44 (0)161 904 1233
Monday to Friday, 8am to 7:30pm
Saturday, 9am to 4pm

And work out a repayment schedule that you can afford, sometimes called a Time to Pay plan. You may be asked to show your outgoings and other debts. There's more information here:

www.gov.uk/tax-credits-overpayments/repay-your-tax-credits

You should have had a letter from HMRC about your tax credit overpayment, that should tell you the amount overpayed. They can only deduct a maximum of 40% of your standard allowance (and that's only if they think it was an overpayment due to fraud i.e. you knowingly not updating them). Best thing you can do is contact your local CAB, they'll go through the possible amounts, outcomes and any options with you.

I would do an SAR and track all your payments to see if they had accounted for everything.

I don’t trust what the Tax Credit people say.

I have never had Tax Credits (Dp earns too much) yet I got a bill for several thousand pounds from them and a notice to pay in full

When I did an SAR it came back with 1 computer screen shot with 1 line saying I had been given the amount in one full payment.

I don’t know who can help you check.

I had a letter for overpayments because they are bloody useless and didn't update our circumstances even after calling to check it was done. Anyway you can request they take the minimum amount which means they split it over 10 years.

They normally reduce it so you get paid a minimul amount unitl they have claimed back what you owe them. I would def check what details they have and make sure it is all correct. It,s quite a common issue.

I'm in the middle of seperating from my DH so my head is all over the place. It looks like they're right, but to be honest I dont have the mental capacity right now to question.

Thank you for replies

They can give you at least 6 years to repay.
Ime.
Stop worrying op.
Seriously- it sounds like you have enough going on already.

If you are separating you only need to pay 50% of the bill anyway. Small mercies. Sorry you are going through this. xx

From the following source: revenuebenefits.org.uk/universal-credit/guidance/existing-tax-credit-claimants/tax-credit-debt/

Paying back tax credits debt – moving to UC

Under legislation in the Welfare Reform Act 2012 and subsequent regulations, DWP have the power to recover tax credit overpayment debts from Universal Credit (UC) payments.

Once the UC award ends, the debt remains with DWP and negotiation for time to pay and hardship will be dealt with by DWP.

The claimant journey

Once the UC claim has been made and the tax credits claim stopped, HMRC should send the claimant a letter TC1131 – ‘Your tax credits overpayments’. An example of this letter can be found here.

HMRC will only transfer ‘safe’ debts to DWP which means if a person is appealing or has an active dispute against a debt it should not transfer. As debts can transfer to DWP at different times, claimants may receive more than one TC1131. No action needs to be taken as a result of this letter unless the claimant wants to challenge an overpayment.

Any time to pay arrangement (normally by direct debit) that the claimant already has with HMRC (or a private debt collector working on their behalf) will be stopped automatically. Claimants who are repaying by standing order will need to cancel it with their bank.

Joint claims

Tax credits operate joint and several liability which means HMRC can ask one or both partners to repay a joint debt. However, their policy set out in COP 26 is that when there is a household breakdown (the couple separate) they will split the debt 50/50 (unless the claimants agree to a different split) and as long as one claimant pays back their 50%, HMRC won’t pursue them for the remaining 50% even if their ex-partner does not pay.

Our understanding is that, where claimants separate, HMRC will split the debt 50/50 before transferring the 50% to DWP for recovery from the single claimant’s UC. Each person should be notified separately of their part of the debt.

Recovery rates in UC

There are 3 main rates of recovery in UC:

15% of the standard allowance (non-fraud debt if you don’t have earned income)
25% of the standard allowance (non-fraud if you have earned income)
40% of the standard allowance (fraud classified debt or you are repaying a hardship payment)
Which recovery rate applies depends on the claimant’s circumstances and can change from month to month. It was announced in Budget 2018 that the 40% rate of recovery will be reduced to 30% from October 2019.

(Sorry for the long post!)

@Lifeisabeach09 that's really helpful, thank you.

It looks like it will be 15% - which will leave me with £250 after my rent is paid. With £200 from child benefit I'll have £450 per month for food and bills, is that even manageable?!

If it's enforced correctly (you never know with DWP), it's 15% of the standard allowance only. Not 15% of the entire amount (standard allowance + child element+housing(renting only)+disability )
Does this change your figures?
Whether £450 is manageable depends on your budget...

Lifeisabeach09 it definitely could! I havent got my award yet but was able to get a £1500 advance so I'm guessing it will be about that amount per month? From doing online calculators I'm entitled to £750 housing, and I have 3 children... not sure what my standard allowance will be based on that?

@babyroobs
@anotheremma

...are the UC gurus. But check the benefits calculator to see if it matches/is similar:

www.entitledto.co.uk

Your total award will include a standard allowance will be 317.82 (same for all single folks over 25) plus 750 housing plus child elements(see rates below):

For your first child £277.08 (born before 6 April 2017) or £231.67 (if born on or after 6 April 2017)
For your second child and any other eligible children £231.67 per child
If you have a disabled or severely disabled child £126.11 or £392.08

But it's 15% of the £317.82 if DWP take it out correctly as you don't have earned income.

Please correct if I'm wrong, gurus.