tax credit overpayment - silly question

short_cake

If u ring the taxcredits people every time there's a change in circumstances like were told to do , be it more hours /less hours , extra pay - less pay due to job loss etc etc any change what so ever

why then do the claimants get overpayment letters - surely if u have done the right thing and told them of all changes its down to them ? or am i missing the point ?

nonnatus

Erm, you're not MISSING the point, you're MAKING the point :cool:.

People DON'T ring HMRC to advise them of changes for a whole host of reasons. Most popular on here seems to be that they kept forgetting, every week when they withdrew their money!

Next most popular is when Tax credits would reduce because of a change in job hours. So, for example, Ms X was getting £100 per week credits because she was working 30 hours. She's just breaking even at home. Suddenly her hours drop to 15 at no fault of her own, so now she's only entitled to claim £30 a week (The figures are completely fictitious and only used to demonstrate the point). The first week she can't bring herself to tell HMRC and be £70 worse off. The next week she thinks "I'll do it next week, just need to get kids new shoes" and so it continues. She doesn't really think she's doing anything wrong because she'll soon find a job paying 30 hours and it'll all even itself out .
Roll on 6 months and she faces a year on minimum tax gredits with a huge overpayment bill.

It happens all the time. I bet you, OP, are in the minority for keeping up to date with changes.

zagfles

What people don't realise is there are some changes which will result in an overpayment even if you tell them immediately, and even if they act on it immediately! It's not the fault of the claimant or of HMRC, it's a fault of the system.

For instance couple with 2 kids, both earn £20k. One of them loses their job at the end of last tax year, so they phone and tell them. Tax credits now based on one £20k income, entitlement about £4700, £91pw.

Half way through tax year partner finds a job, £20k pa. So they phone and tell them straight away, new estimate £30k for the year.

But on £30k the entitlement is only about £650 for the year, and they've already been paid about £2400!

So they have an overpayment even though they informed HMRC immediately! The disregard doesn't apply because last tax year's earning were £40k.

chubbster_1

It can work the other way too tho... if you've been underpaid based on the previous years earnings, then when you give them the final figures for the year, you can find yourself with a bit of a lump sum payment because they underpaid you through the year. - Now that's quite a nice feeling

adamantine

im having a similar struggle understanding this with ref to income support. rang them the day after i got my first CSA payment, they told me to send it in writing along with the schedule of payments etc which i did the next day recorded to be signed for blah blah blah... a month later they finally change it all then say i never contacted them and ive been overpaid!

now they are saying they have no record of me calling and it took 2 weeks after i got my CSA before i told them yet the covering letter states "further to our phone call on x day please find enclosed the requested documentation"

i did what i needed to do and have no problem paying back what i owe but being made out to be a liar and a benefit thief is not on!