Tax Credit Overpayments

1175julie

i have received a letter stating that my tax credits were overpaid due to my earnings increase. My claim ended 12.11.09 and my earnings changed after this resulting in my overall earnings for the tax year 09/10 being higher than the previous year. They say I should have informed them about the change to avoid overpayment but as the change only happened after my claim ended this would be impossible. Is this correct?

lovetowinacar

Tax credits are worked out on figures given for earnings over the whole tax year. The figures are provided by person applying for tax credit.

You state claim ended, did you then provide details of your new earnings for the remainder of the tax year? Why did claim end?

At end of tax year the tax credits office then send you a form to show income for the year and tax credits paid - you need to check this carefully and sign to confirm ok or if not advise them of correct figures - did you do this?

Murgatroyd21

Yes the overpayment would be correct. You must have given a new figure that was less than the previous year figure when the claim/entitlement ended causing a re-calculation based on that new lower figure, then never updated your details when you started getting more income to minimise any overpayment. The award is based on your annual income, not a part of the year, even if you weren't claiming tax credits for the whole year. If you hadn't updated your income there would have been no overpayment if the final figure was within £25000 of previous year figure.

While your entitlement ended 12-11-09, any income earned until 05-04-2010 would count towards your figures for the tax year.