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  • FIRST POST
    • mopixy
    • By mopixy 11th Jul 18, 3:02 PM
    • 8Posts
    • 1Thanks
    mopixy
    CTC overpayments effect on HB
    • #1
    • 11th Jul 18, 3:02 PM
    CTC overpayments effect on HB 11th Jul 18 at 3:02 PM
    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
    Last edited by mopixy; 11-07-2018 at 3:08 PM.
Page 1
    • tboo
    • By tboo 11th Jul 18, 7:10 PM
    • 673 Posts
    • 4,012 Thanks
    tboo
    • #2
    • 11th Jul 18, 7:10 PM
    • #2
    • 11th Jul 18, 7:10 PM
    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
    Originally posted by mopixy

    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
    Started on the No Clutter thread - 25/01/2018
    “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
    Mortgage free 12/07/18. 9 years early

    • mopixy
    • By mopixy 11th Jul 18, 11:23 PM
    • 8 Posts
    • 1 Thanks
    mopixy
    • #3
    • 11th Jul 18, 11:23 PM
    • #3
    • 11th Jul 18, 11:23 PM
    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
    Originally posted by tboo
    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
    • tboo
    • By tboo 12th Jul 18, 3:54 PM
    • 673 Posts
    • 4,012 Thanks
    tboo
    • #4
    • 12th Jul 18, 3:54 PM
    • #4
    • 12th Jul 18, 3:54 PM
    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
    Originally posted by mopixy
    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
    Started on the No Clutter thread - 25/01/2018
    “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
    Mortgage free 12/07/18. 9 years early

    • tomtom256
    • By tomtom256 12th Jul 18, 6:12 PM
    • 957 Posts
    • 1,736 Thanks
    tomtom256
    • #5
    • 12th Jul 18, 6:12 PM
    • #5
    • 12th Jul 18, 6:12 PM
    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
    Originally posted by mopixy

    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.
    • mopixy
    • By mopixy 13th Jul 18, 9:42 AM
    • 8 Posts
    • 1 Thanks
    mopixy
    • #6
    • 13th Jul 18, 9:42 AM
    • #6
    • 13th Jul 18, 9:42 AM
    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
    Originally posted by tboo
    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

    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.
    Originally posted by tomtom256
    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!
    Last edited by mopixy; 13-07-2018 at 9:46 AM.
    • pmlindyloo
    • By pmlindyloo 13th Jul 18, 10:52 AM
    • 11,628 Posts
    • 13,524 Thanks
    pmlindyloo
    • #7
    • 13th Jul 18, 10:52 AM
    • #7
    • 13th Jul 18, 10:52 AM
    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!
    Originally posted by mopixy
    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/
    • tboo
    • By tboo 13th Jul 18, 1:47 PM
    • 673 Posts
    • 4,012 Thanks
    tboo
    • #8
    • 13th Jul 18, 1:47 PM
    • #8
    • 13th Jul 18, 1:47 PM
    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!
    Originally posted by mopixy

    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
    Started on the No Clutter thread - 25/01/2018
    “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
    Mortgage free 12/07/18. 9 years early

    • mopixy
    • By mopixy 13th Jul 18, 3:45 PM
    • 8 Posts
    • 1 Thanks
    mopixy
    • #9
    • 13th Jul 18, 3:45 PM
    • #9
    • 13th Jul 18, 3:45 PM
    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
    Originally posted by tboo
    I do receive HB, recently reassessed based on my income only and no CTC. As I said my problem now is that I have to pay back £3500 to HMRC for 2017-18 CTC overpayments and I am trying to find a way to prove to the system that almost equal to this amount has been taken of our HB during 2017-18. In other words, while I was being overpaid by HMRC I was being underpaid by the Local Council. So there should be a way to get that money back.
    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.

    Mo
    • brewthebear
    • By brewthebear 13th Jul 18, 4:32 PM
    • 135 Posts
    • 136 Thanks
    brewthebear
    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 !!
    • mopixy
    • By mopixy 13th Jul 18, 5:12 PM
    • 8 Posts
    • 1 Thanks
    mopixy
    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/
    Originally posted by pmlindyloo
    Can you please clarify why you think tax code adjustment does not solve my problem? I was assuming that if for whatever reason your tax code changes and consequently your net salary reduces then HB would increase. Is that wrong?
    • mopixy
    • By mopixy 13th Jul 18, 5:38 PM
    • 8 Posts
    • 1 Thanks
    mopixy
    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 !!
    Originally posted by brewthebear
    1. I had no idea I was being overpaid, otherwise I would have stopped it long ago.
    2. My problem is not repaying to HMRC. I owe them this money. The problem is that my HB had been reduced because of the CTC payments. So it is like the council has been taking £200 of my HB entitlement every month because I was getting £300 CTC (which was overpayments and I didn't know). Now I am paying those £300s back to HMRC while the council does not consider paying the £200 pcm that they took of my HB.

    I hope it is clear now.
    • tomtom256
    • By tomtom256 13th Jul 18, 5:50 PM
    • 957 Posts
    • 1,736 Thanks
    tomtom256
    I do receive HB, recently reassessed based on my income only and no CTC. As I said my problem now is that I have to pay back £3500 to HMRC for 2017-18 CTC overpayments and I am trying to find a way to prove to the system that almost equal to this amount has been taken of our HB during 2017-18. In other words, while I was being overpaid by HMRC I was being underpaid by the Local Council. So there should be a way to get that money back.
    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.

    Mo
    Originally posted by mopixy

    You had the income at the time of the award, as such the award was correct as it included this income, which you presumably used at that time.


    The OP and paying it back is a totally different matter and as you no longer have that income, the award is now correct based on the income you are currently receiving.


    Any outgoings are not accounted for in any award of benefits.
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