CTC overpayments effect on HB
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mopixy
Posts: 8 Forumite
Hi guys,
I have got a question about the effect of child tax credit overpayment on housing benefit. I couldn't find an answer by searching the website, so I would really appreciate if anyone can help.
I am working full-time and my wife is not working, but she is in receipt of DLA and we have got two kids. We used to get CTC and HB while I was working part time at the start of financial year in 2017. HB was of course adjusted because of the CTC we were receiving. I started working full-time in July and informed both the HMRC and local council about change of circumstances. HMRC kept paying CTC at the same rate and the council worked out our HB based on my new income and the CTC. Now after almost a year HMRC has sent us a letter of overpayment by £3500, even though they knew about the changes in my working hours and my income. We disputed it but it seems that it cannot be avoided and I have to pay the overpayments back.
My question is, what happens to the HB cuts because of the CTC payments over the past 11 months? We have been receiving reduced HB (quite rightly) because we were receiving CTC. Now that HMRC wanted their money back can we ask local council to work out the correct HB since last July and backdate our HB?
Has anyone been in this situation before?
Regards,
Mo
I have got a question about the effect of child tax credit overpayment on housing benefit. I couldn't find an answer by searching the website, so I would really appreciate if anyone can help.
I am working full-time and my wife is not working, but she is in receipt of DLA and we have got two kids. We used to get CTC and HB while I was working part time at the start of financial year in 2017. HB was of course adjusted because of the CTC we were receiving. I started working full-time in July and informed both the HMRC and local council about change of circumstances. HMRC kept paying CTC at the same rate and the council worked out our HB based on my new income and the CTC. Now after almost a year HMRC has sent us a letter of overpayment by £3500, even though they knew about the changes in my working hours and my income. We disputed it but it seems that it cannot be avoided and I have to pay the overpayments back.
My question is, what happens to the HB cuts because of the CTC payments over the past 11 months? We have been receiving reduced HB (quite rightly) because we were receiving CTC. Now that HMRC wanted their money back can we ask local council to work out the correct HB since last July and backdate our HB?
Has anyone been in this situation before?
Regards,
Mo
0
Comments
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Hi guys,
I have got a question about the effect of child tax credit overpayment on housing benefit. I couldn't find an answer by searching the website, so I would really appreciate if anyone can help.
I am working full-time and my wife is not working, but she is in receipt of DLA and we have got two kids. We used to get CTC and HB while I was working part time at the start of financial year in 2017. HB was of course adjusted because of the CTC we were receiving. I started working full-time in July and informed both the HMRC and local council about change of circumstances. HMRC kept paying CTC at the same rate and the council worked out our HB based on my new income and the CTC. Now after almost a year HMRC has sent us a letter of overpayment by £3500, even though they knew about the changes in my working hours and my income. We disputed it but it seems that it cannot be avoided and I have to pay the overpayments back.
My question is, what happens to the HB cuts because of the CTC payments over the past 11 months? We have been receiving reduced HB (quite rightly) because we were receiving CTC. Now that HMRC wanted their money back can we ask local council to work out the correct HB since last July and backdate our HB?
Has anyone been in this situation before?
Regards,
Mo
HB is calculated on income received at that time
If HMRC have thus decided to reduce your CTC then that's their decision.
No backdate I'm afraid
Page 66
Recovery of overpaid tax credits
P2.635 If an overpayment of tax credits has occurred during a period in which HB/CTB was also payable,
and the overpayment is subsequently recovered, there is no provision in regulations to reassess
the HB/CTB award for that previous period“You’re only here for a short visit.
Don’t hurry, don't worry and be sure to smell the flowers along the way.”Walter Hagen
Jar £440.31/£667.95 and Bank £389.67/£667.950 -
HB is calculated on income received at that time
If HMRC have thus decided to reduce your CTC then that's their decision.
No backdate I'm afraid
Page 66
Recovery of overpaid tax credits
P2.635 If an overpayment of tax credits has occurred during a period in which HB/CTB was also payable,
and the overpayment is subsequently recovered, there is no provision in regulations to reassess
the HB/CTB award for that previous period
I am really disappointed though. It is not fair at all. I am sure I am not the first person in this situation. Someone somewhere should have considered updating the regulation regarding this situations to ensure that the people don't get stripped of their entitlements. There must be a way to fix this.
Anyway, I was also wondering if there is any chance that our current housing benefit increases if we provide the local council with the details of our repayment plan to HMRC? I mean they had reduced the HB based on the fact that we were receiving CTC from HMRC, now that it is reversed and we are paying back to HMRC could they consider it in reassessing the HB?
Mo0 -
Thanks @tboo !
I am really disappointed though. It is not fair at all. I am sure I am not the first person in this situation. Someone somewhere should have considered updating the regulation regarding this situations to ensure that the people don't get stripped of their entitlements. There must be a way to fix this.
Anyway, I was also wondering if there is any chance that our current housing benefit increases if we provide the local council with the details of our repayment plan to HMRC? I mean they had reduced the HB based on the fact that we were receiving CTC from HMRC, now that it is reversed and we are paying back to HMRC could they consider it in reassessing the HB?
Mo
Sorry HB will only assess on the ctc you are receiving.
If the CTC is now reduced due to HMRC changing them to take the o/p back then the council will be aware of the changes - look at the notification letters to see if the new weekly amount matches the CTC award otherwise show your tax credit revised award to the council
if you are repaying the ctc any other way then sorry HB can't be changed as that will be an expense and HB doesn't consider income out only income in
You can ask for a DHP - if your expenxes are higher than your income
link“You’re only here for a short visit.
Don’t hurry, don't worry and be sure to smell the flowers along the way.”Walter Hagen
Jar £440.31/£667.95 and Bank £389.67/£667.950 -
Thanks @tboo !
I am really disappointed though. It is not fair at all. I am sure I am not the first person in this situation. Someone somewhere should have considered updating the regulation regarding this situations to ensure that the people don't get stripped of their entitlements. There must be a way to fix this.
Anyway, I was also wondering if there is any chance that our current housing benefit increases if we provide the local council with the details of our repayment plan to HMRC? I mean they had reduced the HB based on the fact that we were receiving CTC from HMRC, now that it is reversed and we are paying back to HMRC could they consider it in reassessing the HB?
Mo
Why is it not fair, you had the income at the time so the HB was lowered. Now the CTC is lowered the HB should raise.0 -
Sorry HB will only assess on the ctc you are receiving.
If the CTC is now reduced due to HMRC changing them to take the o/p back then the council will be aware of the changes - look at the notification letters to see if the new weekly amount matches the CTC award otherwise show your tax credit revised award to the council
if you are repaying the ctc any other way then sorry HB can't be changed as that will be an expense and HB doesn't consider income out only income in
You can ask for a DHP - if your expenxes are higher than your income
link
My problem is that I do not qualify for CTC anymore, so I have to pay it back in instalments (If I can!) and based on what you said HB won't consider this expense in their calculations so I am screwed!
I am exploring another option though. What happens if I ask HMRC to recover the overpayment .through adjusting my tax code? This way my household income will decrease and HB should be adjusted to my new income, is that right? Do you think that's the way that I could recover at least part of the HB we have lost because of CTC overpayments?
Thanks,
MoWhy is it not fair, you had the income at the time so the HB was lowered. Now the CTC is lowered the HB should raise.0 -
Thanks for the clarification.
My problem is that I do not qualify for CTC anymore, so I have to pay it back in instalments (If I can!) and based on what you said HB won't consider this expense in their calculations so I am screwed!
I am exploring another option though. What happens if I ask HMRC to recover the overpayment .through adjusting my tax code? This way my household income will decrease and HB should be adjusted to my new income, is that right? Do you think that's the way that I could recover at least part of the HB we have lost because of CTC overpayments?
Thanks,
Mo
As I said the problem is that CTC is not lowered, it has stopped. So I have to pay the overpayments directly to HMRC and HB won't cover that expense!
See bolded part.
I do not know if this option is available any more and I am pretty certain that this will not solve your problem.
I think you are grasping at straws to be honest.
You need to have a thorough read of this and make some arrangements to pay back what you owe.
https://revenuebenefits.org.uk/tax-credits/guidance/how-to-deal-with-hmrc/dealing-with-debt/0 -
Thanks for the clarification.
My problem is that I do not qualify for CTC anymore, so I have to pay it back in instalments (If I can!) and based on what you said HB won't consider this expense in their calculations so I am screwed!
I am exploring another option though. What happens if I ask HMRC to recover the overpayment .through adjusting my tax code? This way my household income will decrease and HB should be adjusted to my new income, is that right? Do you think that's the way that I could recover at least part of the HB we have lost because of CTC overpayments?
Thanks,
Mo
As I said the problem is that CTC is not lowered, it has stopped. So I have to pay the overpayments directly to HMRC and HB won't cover that expense!
If you have no CTC then HB should be assessing you on income only - unless that is too high to qualify you
If you have an element of HB then explore the DHP route - they look at income and expenses“You’re only here for a short visit.
Don’t hurry, don't worry and be sure to smell the flowers along the way.”Walter Hagen
Jar £440.31/£667.95 and Bank £389.67/£667.950 -
If you have no CTC then HB should be assessing you on income only - unless that is too high to qualify you
If you have an element of HB then explore the DHP route - they look at income and expenses
If I couldn't convince HMRC to recover their money through adjustment of my tax code I am gonna have to ask council for reassessment and backdate, which they will probably reject, and then appeal against their decision. Do you think I have a shot?
There must be still some fairness left in this system.
PS. DHP route would be the last resource, thanks for the hint.
Mo0 -
But you knew the benefits you were receiving were wrong.
Why did you not put some aside for when the eventuality dropped and had to be repaid.
You can,t have it always which is what appears you want !!0 -
pmlindyloo wrote: »See bolded part.
I do not know if this option is available any more and I am pretty certain that this will not solve your problem.
I think you are grasping at straws to be honest.
You need to have a thorough read of this and make some arrangements to pay back what you owe.
https: //revenuebenefits.org.uk/tax-credits/guidance/how-to-deal-with-hmrc/dealing-with-debt/0
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