Tax credit overpayments

Tax credits & benefits

Tax credit overpayments

By Joe Elvin

Article 10 of 10

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Tax credit overpayments

What to do if you're overpaid tax credits, why you might receive an overpayment and how to challenge a tax credit overpayment.

Tax credits have helped thousands of families, but the system is not without its problems.

One of the biggest problems for people is to do with overpayments. This is where you receive more tax credits that you are entitled to and HMRC demands that the overpayment is repaid.

The problem is that it's very difficult for people to accurately check their award, so most people can't check whether they are being paid too much. Because of this, many overpayments have to be repaid one way or another.

NOTE: Tax Credits are due to be replaced by Universal Credit. Transitional arrangements will apply. Full details have yet to be announced.

Tax credits overpayments: Why they happen

Overpayments might happen if:

  • You don't give the right information when you first claim or when you renew your claim at the end of the year.
  • You're late telling HMRC about a change in your circumstances or a significant increase in your income.
  • You give the wrong information when you tell HMRC about a change in your circumstances.
  • HMRC makes a mistake when processing your tax credit award.
  • HMRC doesn't act on information you have given them.

Challenging a tax credit overpayment

If you don't agree that you should pay back an overpayment, then you can challenge this. This is called a dispute. If you think the amount of the overpayment is wrong because HMRC has calculated your tax credits incorrectly, then you should appeal using form WTC/AP.

You can ask HMRC to look at your tax credit award again. HMRC calls this disputing an overpayment.

If you are disputing your overpayment for other reasons, you can either use form TC846 – Tax credits overpayments or you can write to the tax credit office giving them all your details and telling them why you think you shouldn't have to pay back an overpayment.

HMRC code of practice

HMRC has a code of practice that it must abide by when dealing with overpayments. This is called COP26 What happens if we have paid you too much tax credits?

If you have been told that you have been overpaid and are being asked to repay this, make sure you get hold of a copy of COP26, so you know your rights.

You may also be able to get help from TaxAid or from the Low Incomes Tax Reform Group.

  • Last updated: April 2016
  • Updated by: Joe Elvin