Tax Credits Overpayment! Help please!

amco35

Hi,

I've just received a letter from tax credits. It says I owe them £1453.86. Can someone on here please help me understand if this is right or not?

The letter is dated 8th July 2015 and is a final tax credits decision for 6/4/14 to 5/4/15. It says I am entitled to £233.14 tax credits and that £1,687 has been paid to me, so I owe them £1,453.86. A reduction of £2,511.66 has been made due to my income going up. I earned £17,546 from April 2014 to April 2015. At least £2,000 of this amount was due to overtime.

My income for April 2013 to April 2014 was £6,855 (much less) as I started my job in November 2013.

On 27 June last year I got my Tax Credits award letter for 6/4/2014 to 6/4/2015. It said I was entitled to the £1687 tax credits for that period. It said on the award letter that my income for 2014 to 2015 would be £14,000 but that they are using an income of £9,000 to calculate my award. What's that about??

The £14,000 income was the amount I told them I would roughly be earning. I had no idea at that time that I would earn more doing overtime. However I did phone tax credits in January and told them my income would be higher that the £14,000 as all my overtime was during the Xmas period. They said it shouldn't affect my tax credits!

I'm at a loss to understand how I owe them £1,453.86. Can anyone give me some clarity please?

Thank you,

A-M

fierystormcloud

Maybe you should ring them and ask?

It seems to be down to the fact that your income was higher this year than it was last year, and your tax credits were based on last year's income, so you were overpaid tax credits.

You need to ring them and talk to them about it.

amco35

I know what you mean, but I declared an income of £14,000 (estimated) and they still said I was entitled to £1,687 tax credits for 2014 to 2015. When I called them in January to tell them my estimated income would be higher...they reassured me that it shouldn't affect my tax credits. So how on earth can they now turn round and say I owe them £1,453.86??

fierystormcloud

What was the difference though, between what you estimated, and what you actually earned?

Icequeen99

amco35 wrote: »

I know what you mean, but I declared an income of £14,000 (estimated) and they still said I was entitled to £1,687 tax credits for 2014 to 2015. When I called them in January to tell them my estimated income would be higher...they reassured me that it shouldn't affect my tax credits. So how on earth can they now turn round and say I owe them £1,453.86??

The overpayment is correct because of the substantial rise in income.

Whether there is a dispute very much depends on the exact wording of the conversation you had in January. What figure did you estimate in January?

IQ

Caz3121

amco35 wrote: »

I earned £17,546 from April 2014 to April 2015. At least £2,000 of this amount was due to overtime.

My income for April 2013 to April 2014 was £6,855 (much less) as I started my job in November 2013.

On 27 June last year I got my Tax Credits award letter for 6/4/2014 to 6/4/2015. It said I was entitled to the £1687 tax credits for that period. It said on the award letter that my income for 2014 to 2015 would be £14,000 but that they are using an income of £9,000 to calculate my award. What's that about??
You are allowed an increase of £5k from the previous years income, because you told them you would be earning £14k, you get the benefit of the £5k disregard by the figure being used being £5k less than your actual income (but anything earned over the £14k would result in an overpayment)

The £14,000 income was the amount I told them I would roughly be earning.

Had you known your income would be £17,546 then your award would have been based on an income of £12,546 (giving you the £223.14 award) - you are always better over estimating in case of overtime and if you get it wrong they will owe you money at the end of the year
Your overpayment may be in 2 parts
1) the amount you were overpayed by the award being based on an income of £9k instead of £12,546
2) As you would not be entitled to tax credits since April (I am assuming based on the figures you are single with no children) anything you have been paid since April would be due back

amco35

Icequeen99 wrote: »

The overpayment is correct because of the substantial rise in income.

Whether there is a dispute very much depends on the exact wording of the conversation you had in January. What figure did you estimate in January?

IQ

I phoned them on 21st January (I have the persons name) to say my income had gone up. I said it would be at least a couple of thousand pounds higher than my estimate and that I was concerned I would no longer be entitled to tax credits. The guy reassured me that it wouldn't affect my tax credits. I can't remember the exact conversation, but that was more or less it. I made it clear that I was worried and that I didn't want to end up with an overpayment. Is this grounds for a dispute?

Caz3121

you could argue that, had they actioned the information from the call correctly at the time, they could have stopped paying you and the amount you would have to pay back now would be lower as it would not include the payments made from end January, but I don't think it stops the overpayment being repaid.
If last years income was used in an award (most common) then an increase of up to £5k does not cause any overpayment but, as your claim was already based on an estimate it would. Sounds like the individual answered correctly for the majority of claims but incorrectly for your individual claim.
Might be worth getting them to listen to the call to see if they went through your individual case or just gave the most common answer without checking (but I do not know if that wipes out the overpayment)

Icequeen99

amco35 wrote: »

I phoned them on 21st January (I have the persons name) to say my income had gone up. I said it would be at least a couple of thousand pounds higher than my estimate and that I was concerned I would no longer be entitled to tax credits. The guy reassured me that it wouldn't affect my tax credits. I can't remember the exact conversation, but that was more or less it. I made it clear that I was worried and that I didn't want to end up with an overpayment. Is this grounds for a dispute?

no harm in trying. You need to request a copy of the phone call recording.

IQ

amco35

Thank you for all the replies. However, I'm still massively confused:eek:. I don't want to call Tax Credits until I can actually understand what I'm talking about!

On the tax credits award form for 2014 to 2015 it states that my income is £14,000 and based on an estimate by me.
So why did they use an income of £9,000 to calculate my tax credits for 2014-2015? Obviously this has something to do with the £5,000 disregard, but why reduce my estimated income by £5,000?

I earned £3,000 more than I estimated so does the £5,000 disregard not cover that??

Sorry if it's blatantly obvious (maths was never my strong point ;-)

amco35

blondebubbles wrote: »

The disregard compares your previous years income to be current year, not in comparison to the estimate you gave.

When you estimated £14,000 they disregarded £5000 so paid you based on £9000.

When you then gave the exact income of £17,546 they disregard £5000 so will recalculate the award based on £12,546.

So your overpayment is the difference in entitlement between £9000 and £12,546.

As tax credits reduces by 41p for every £1 earned you calculate this based on £12,546 - £9000 = £3546 * 41% = £1453.86

Thank you. It's slowly sinking in that all my overtime was not worth it. Had I earned what I estimated I would have had no overpayment!
Grrrrrr :mad:
I'm going to get a copy of the phone call recording and go down the dispute route.