Over payment of tax credits and now going to take it out of my weekly pay

katyt27

Hello we had an over payment of tax credits from 10 years ago (had never ever claimed before and only did as I was on maternity and husband was made redundant. This week they have wrote to say they are going to take payment from my husbands weekly income-looking to be around £40/50 a week-this will mean we will struggle to pay mortgage etc. we understand this money is owed but to take so much each much will leave us struggling financially-can they do this or do we have other options? Thank you 

Rubyroobs

I would give them a call and see if you can negotiate lower payments. We once owed £900 and they agreed for it to be paid back at £30 a month over 3 years. How has it reached a point where they take it directly from wages, have you been given repayments options prior to this?

JonVarnas

Rubyroobs said:

I would give them a call and see if you can negotiate lower payments. We once owed £900 and they agreed for it to be paid back at £30 a month over 3 years. How has it reached a point where they take it directly from wages, have you been given repayments options prior to this?

Responsibility for collecting Tax Credit Debt has been passed to the DWP and basically out of the blue you'll get a letter stating how much they claim you owe and how much they take out of your wages/benefits, and they pretty much start taking it straight away.

You can negotiate with the DWP though, and I found them quite amenable. In my case out of the blue I got a letter saying they're taking £50 a month out of my £317 Universal Credit allowance, which is a huge chunk. I called them and managed to get it knocked down to £15 a month and probably could've knocked it down lower because even the advisor on the line said "Jesus, that's a lot" when he saw the original amount.

calcotti

JonVarnas said: Responsibility for collecting Tax Credit Debt has been passed to the DWP

That is not true for all cases. Some debt has been passed to DWP.
According to a written answer in parliament today some £3 billion of debt has so far been transferred with a further £2.4 billion to be transferred.

JonVarnas

calcotti said:

JonVarnas said: Responsibility for collecting Tax Credit Debt has been passed to the DWP

That is not true for all cases. Some debt has been passed to DWP.
According to a written answer in parliament today some £3 billion of debt has so far been transferred with a further £2.4 billion to be transferred.

In my experience though HMRC don't garnish wages immediately, they tend to go through a process that involves debt collectors and the courts. The DWP have the powers to not bother with all that. As soon as they get notified of the text credit debt they just take a prescribed amount from benefits/wages, though I think with self-employed they have to use debt collectors.

NedS

My understanding of the current process is that HMRC (Tax Credits) would write to notify you of the overpayment and that it has been passed to debt recovery. You then have 30 days to contact debt recovery to agree (negotiate) repayment terms otherwise they will begin automatic recovery from any benefits that are in payment (UC) or from wages if you are employed and not in receipt of UC.

The letter described by the OP sounds like they are seeking to recover from wages (as presumably no UC in payment?) unless the OP contact immediately to arrange repayment terms, either full repayment by debit card over phone or set up an agreed monthly direct debit agreement. If you don't enter into a repayment agreement, then they will simply deduct the legally prescribed amount from wages. Phone them and put in place a repayment agreement you are happy with.

calcotti

JonVarnas said: In my experience though HMRC don't garnish wages immediately, they tend to go through a process that involves debt collectors and the courts. The DWP have the powers to not bother with all that. 

I believe that is correct. Your previous comment could however be read as meaning that all Tax Credit debt had been passed t DWP for recovery and it was that impression I was seeking to correct.

NedS said:

My understanding of the current process is that HMRC (Tax Credits) would write to notify you of the overpayment and that it has been passed to debt recovery. You then have 30 days to contact debt recovery to agree (negotiate) repayment terms otherwise they will begin automatic recovery from any benefits that are in payment (UC) or from wages if you are employed and not in receipt of UC.

Based on the number of people who say they were not aware of their Tax Credit debt (usually historic) until DWP advised them of deductions being made I don't think that is what happens.

[Deleted User]

I had a debt letter from HMRC a few months back, from an overpayment from 2017, although mine was just a few hundred, mine came straight from them, not DWP.