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P11d value taxed twice through tax credits and PAYE tax code?

Sorry if this sounds like a silly question but ...

I have a low cost loan from work which, naturally impacts on my tax coding. I think last year the benefit was worth about £1500 so I am more than happy to pay 20% tax (£300) on that.

However, I am also required to declare the same figure in our tax credit claim, so in my opinion, our tax credit claim is being reduced by the same amount.

Have I misunderstood the system, or am I really paying £600 tax on a £1500 benefit?

I would greatly appreciate it if someone can clear this up for me because I just get stonewalled by the operators on the helpline and they just tell me it needs to be declared (so perhaps my question is pretty silly?). Thanks

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