Tax credit overpayment?

squid_liquor

Are we right in this being how it works... it seems bizarre to us...

we were receiving tax credits since april, given an earnings estimate of £28k... nothing drastic, but about £30 a week coming in which was quite useful. either way, thats what i was earning, and thats how much HMRC said we should be getting in credits... fine.

a few months ago a job became available that was unexpected (maternity cover) so i apply for it.. i get the job and it pays a lot more, nearer £43k.

i tell HMRC about this, including the old earning, and the projected new earnings (by april 2019). we both calculated around the same earnings by april, so all fine and dandy. as expected, we are not not entitled to any tax credits... fine of course as the increase in income covers it.

but now we are being told by HMRC that we owe nearly £3k as we were overpaid between april and [new job], and that we need to pay this £3k back by april if we dont want the debt to be handed to a collection agency?!

how the hell are we meant to pay back £3k just like that..?!

Alice_Holt

Which Tax Year does the £3k relate to?

First step would be to request a breakdown of the overpayment calculation, and check that against your income and circumstances in that tax year.

Some info on TC here:
https://revenuebenefits.org.uk/tax-credits/guidance/how-to-deal-with-hmrc/

HMRC will usually accept a repayment plan, if you provide an Income & Expenditure form.

squid_liquor

the £3k relates to this tax year (18/19).

all the numbers that they have are correct. from april to [job] the earnings were ~£28k (per annum). from [job] - april the (per annum) earnings are £43k. the projected earnings are somewhere in the middle of that of course.

HMRC says that we were paid ~£3k between april and [job] that we were not entitled to because our earnings (the number in the middle) are too high, so we were never entitled to that amount in the first place.

sheramber

Tax credits are calculated on the year's income so an increase in income arising during the year can result in you having been overpaid from the start of the year if your new annual income means no tax credits due.

calcotti

Given that you were only receiving a modest amount of tax credits it is not surprising if your entitlement is now nil given that you have had a substantial change to your annual income. Speak to HMRC about paying it back over a period of time. However, given the significant increase in your income, I suspect they are likely to expect you to be able to pay it quite quickly.

Alice_Holt

squid_liquor wrote: »

the £3k relates to this tax year (18/19)...
..."but about £30 a week coming in which was quite useful."

Are you sure?

In your opening post you indicated TC receipts of £30 a week (or have I misunderstood), an o/p of £3k for a period of April '18 to Dec '18 would represent closer to £80 a week.

aliwali

The same has happened to me. I was a student and then started job in August as a teacher so no income to £22k. We have been told we owe £795, but they haven’t asked for it back yet. I read up on it and it says they wait until the next tax year in case your circumstances change over the current year. I find it incredibly annoying as we really needed that money at the time as I wasn’t earning, but I guess that’s just the way it is. Hope you manage to sort a viable repayment plan.