Can You Get Tax Credits Overpayment Written Off?

Tax credit overpayments can happen for a few different reasons – but, most commonly, they happen if your circumstances change but you don’t tell HM Revenue and Customs (HMRC) in time.


If you’ve received tax credit payments but your entitlement has changed, you may end up with a tax credit debt.


In this guide, we’ll look at tax credit debts in more detail – including:


  • What kind of situations can lead to a tax credit debt
  • Can a tax credit debt be appealed against or written off?
  • What you should do if you’ve realised you’ve had tax credits overpayments
  • Some helpful contact details for HMRC


We’ll also answer a few commonly asked questions about overpaid tax credits, so you’ve got all the information you need to take your next steps.


Reliable , friendly people who care


"Very helpful people who took care to talk to me like i mattered and helped me set my debt recovery . I feel more positive going forward that im not struggling every week hand to mouth . They helped me all the way with the process and were always on end of a phone ready to help . I recommend them 100%"


See how we can help

What are tax credits?


Tax credits are a kind of benefit that the government pays to people, either:


  • if you have children, and/or
  • you earn under a certain amount


This means there are two different types of tax credit – working tax credit and child tax credit.


Tax credits are ‘means tested’ – which means the government considers your financial circumstances (including how much you earn and how much you have saved) before deciding how much you can get.

You can either claim by yourself or with a partner. If you claim with a partner, your combined income and circumstances will be means tested.


Tax credits are usually paid directly into your bank account every 4 weeks, by a direct payment.


Why might a tax credit overpayment happen?


Overpayments usually happen because of the way that HMRC works out your tax credit entitlement. How much they think you should be paid is based on your financial circumstances the last tax year.


The tax year runs between 6 April and the following 5 April. So, HMRC will look at your circumstances for this period to decide how much you’re going to be entitled to for the following 12 months.


If this estimate is too low, they could end up paying you more that you’re officially entitled to.


Other reasons for tax credit overpayments


Underestimating your following year’s financial circumstances is the most common reason tax credits are overpaid – but there are other reasons.


Late reporting


If you leave it too late to tell HMRC about a change that causes your entitlement to drop, you could get an overpayment. Typical changes might include changes in working hours or a child leaving full-time education.


Under-estimated earnings


If you underestimate how much you’re going to earn for the year, you might end up being paid too much working tax credit.


HMRC delays


If HMRC take too long to process changes they’ve been informed of, they may end up paying you too much.


Claimant error


If you make a mistake on a tax credit claim or renewal form, you could end up with tax credit overpayments.


HMRC error


If HMRC make an error (whether that’s a system problem or a human error) with their tax credits system, you may end up with more than you’re entitled to.


HMRC investigation


HMRC sometimes starts investigations if they feel like someone has tried to misrepresent their circumstances to claim more than they’re entitled to.


Late renewal forms


If your claim form or renewal form is sent to HMRC late, they may end up working off out-of-date information and therefore make a tax credit overpayment.


Do you have to pay back tax credit overpayments?



In short, yes, you have to pay back any tax credit overpayments that have been made.

As far as HMRC are concerned, if you’ve been paid something that you’re not entitled to, it will need to be recovered from you.


As you can see, there are numerous reasons why you might get tax credit overpayments – from HMRC mistakes right through to investigations around possible fraud.


Unfortunately though, it doesn’t matter who is to blame for your overpayment. Whether it’s a problem with the info you give HMRC or something they’ve done wrong, you’ll still be expected to pay any overpayment back.

Ways to Save on Your Summer Holiday Flights

July 10, 2023
Thinking of jetting off somewhere warm this summer? Before you get hot under the collar at the sky-high price of flights, look at some of the tricks that can cut the cost of your plane ticket.

Cheap as Chips! Tasty Ideas for Packed Lunches

July 10, 2023
Making and taking a packed lunch to work, college, or a day out can seem like a bit of a faff. But, when you haven’t got a sausage and the chips are down (terrible, sorry), preparing your own food can be cheaper, healthier and, if you go about it the right way, a bit of fun. Rather than doing it once, getting bored and binning your Tupperware box, the secret is to rustle up packed lunches that are cost-effective, easy to make and a little bit different. If you buy great ingredients in bulk, you can do all your chopping, dicing and preparing in one go and keep enough for a week in an airtight container in the fridge.

Hot Tips to Cut the Cost of Cooking

July 10, 2023
If you’ve ever looked in your freezer and discovered a UFO (Unidentified Frozen Object), or defrosted a steak and kidney pie only to discover (after you’ve poured gravy on it) that it contains apple, then you might benefit from being a little more organised in the kitchen. Taking something out of the fridge or cupboard and sniffing it to see if it’s ok, is not what’s meant by food preparation. If you save just £1 a day by not chucking out or wasting food, that adds up to a tasty (!) £365 a year. Double that, save £2 a day and you’ve got … well, you do the maths.

Five tips for saving on your weekly shop

July 10, 2023
Doing the weekly food shop rarely comes with many surprises, but over the last few months, many got an unwelcome shock when their usual weekly shop came with an unusual price tag. Food bills are predicted to rise by £454 this year , higher than previous predictions. Back in April, researchers at Kantar estimated that the cost of an average annual shop would go up by £280. However, that previous estimate has risen to nearly £400. The current cost-of-living crisis is seeing inflation affect every aspect of life and that includes in the weekly shop. Luckily, United Insolvencyis here with another list of tips and tricks to help cut the receipts back down to size.

Benefits

July 10, 2023
It’s no secret that the benefits system in the UK can be quite confusing to those not in-the-know, especially considering that incoming governments bring with them new changes that can complicate things further. But the bottom line has always remained the same: you could be entitled to financial support depending on your personal circumstances. The benefits system in the UK is set up to aid those who are: Unemployed and actively looking for work On a low income Living with a disability Bringing up children Retired A carer Too ill to work

How to cut down on subscription costs

July 10, 2023
Subscription services can often be a good way to streamline costs and get some monthly comforts to make the start of every month a little more exciting. Still, subscription services can sometimes get out of hand and before you know it, a huge chunk of your pay check can disappear in the blink of an auto-renewal. In our continued series of blog posts intended to help cut the cost of everyday living, we’ve put together some handy tips for managing your subscription services and finding ways to cut those annual payments back down to live.

How to manage your money in a recesion

By PAR002_123 • July 10, 2023
The ongoing cost of living crisis is being driven by high inflation and even higher costs. But with further price hikes expected and the economy on track to fall into a recession within a matter of months, you might be wondering what this means for your finances. It’s normal for the economy to experience extreme highs and lows from time to time, but by sitting back and waiting for a recession to blow over, you could be putting yourself and your finances at risk. In this blog, we’ll let you know how to manage your money before and during a recession so you can protect your pennies and avoid making minor money mistakes with major consequences.