Tax Credits - I've been overpaid!!!!

[titchy]

I've just had my notification through and I've been overpaid during 2004/05 by £320 and in 2005/06 by £40. So that's over £350 I now owe the taxman.....and with an overdraft running into four figures I could really do without this. I'm not disputing it, we earnt well over the £58k threshold last year, but for some reason I thought lastyears was based on our previous year's salary so this is a bit of a shock.

Does any one know whether they'll want the whole lot back and when? Can I pay it back in installments, or reduce my tax code for a year or something?

Thanks wise MNers!

are you receiving any credits this year?

In the past we've been overpaid and what they usually do is deduct any overpayment from the credits that you are now receiving.

Eg. one year we received WTC and then when our income increased they said that we'd been overpaid and that the next year we weren't entitled to the WTC anymore. So to pay back the WTC that they had overpaid us they reduced the weekly CTC payments.

I'm not sure what would happen though if you weren't receiving anything at all. Not sure if you can set up a payment plan of X amount a month or if they'd want it all back in a lump sum.

Check with CAB they'll be able to tell you, or phone the helpline at the IR

You will get tax credits based on what your actual income is for the year, but they pay you based on the previous year's income then adjust it at the end of the year, so if they thought your income was, say, £50K, and in fact it turned out to be £58k, that's why they've overpaid. Not sure I've explained that very well!

As linnet says they will take back what they owe from future paymens. (been there done it!)

BUT it is outrageous that they do this, and even though you see the error and understand why, don't you feel angry that their crap system means you have to now be without?

If you do feel that way write and tell them. Even if it doesn't change anything i think they need to recognise just how many peoples lives they are upsetting with this.

I had one years worth of payments stopped due to an overpayment. Then they wrote to tell me i wasn't going to get anything for a second year. Then luckily they finally responded to the letter i had written about 9mths before and agreed it was their mistake and they would clear the debt from now.

So basically we compromised and i'd paid back about half the debt when they called it a day and reinstated my ctc payments.

they don't always take back on future credits - we were overpaid last year as well and we are now paying back in monthly installments - grrrrrr was really angry, went around in circles trying to sort it out ( we will be owed for this year as I've been on mat leave so they will owe us money - its a ridiculous system........) you can arrange to pay back as much as you can afford the people were really helpful.

but as soon as we've paid it all back we will likely get the same amount awarded for this year, what a farce

They are w*nkers. Pure and Simple.

I have had sooo many rants about these people. "You give us what you earnt last year, and we'll guess at your payments this year and then take it all back".

Along with the whole writing and telling them how useless their system it - make sure you update them of income changes AS SOON AS THERE IS A CHANGE. They will update your credits immediately - so you won't have the mess next year.

I was told yesterday that you are allowed £2500 extra a year before they change how much you are awarded for that year... I'm not sure if the £2500 figure changes as you get higher/lower along the payscale though so probably best to check it out.

Hana - tell them NOW about maternity etc - it will adjust it all (unless you are coping ok now, which means you'll get a lump sum next April )

A couple of threads you might be interested in here and here

If I were you I would write a strong letter saying that this is there mistake and that if they take the money back you will be really hard up. Gordon Brown said that if the error is their fault (which in your case it is) then they should write the debt off. I would write a letter asap.

Titchy, I was recently overpaid by a 1000pound and they are giving me 75% of this years award the other 25% will be taken back as the overpayment. So this year I am receiving 250pound less from tax credits. But the further 750pound will be taken back from future years tax credit awards. I have the 1000pound in a high interest account. They manage to cock up everyones award as far as I'm concerned!

These people are awful aren't they? Left us with £20 to house and feed three kids two Christmases ago after Dh went back to work (lost his job from being ill), he hadn't been paid yet and I was on the extended maternity leave with no money. When dh went back he lost his entitlement to benefit because he was working but it took five weeks to get any money from his employer, naturally.
I had claimed WTC/CTC because you can on Maternity leave, but when income officially rose (because dh had job, even though not been paid....) they decided we had been overpaid.

You CANNOT win with these silly, silly people!

Yeah - b*stards aren't they. Trouble is they are right - we were overpaid last year. We have a household income of nearly £70k a year so really the tax credits should be for families much worse off than we are. We aren't eligible this year so the overpayment can't be just knocked off this years credits.

Looks like I've got to increase my overdrat even further to pay it

can I pay in installments does anyone know?

Titchy you can pay by instalments but the problem is they usually set the amount you pay back because they have the information they need regarding wages etc so they work it out and send a stupid award notice to say what you have to pay back. But if you def can't afford the amount they say, you can apeal for it to be lowered. Dp wages goes up in August and we will prob be in same boat as we need to pay back by instalments as we won't be entitled to working tax but still entitled to child tax.