Tax Credit Overpayments

The Tax Credits Office didn’t remove one of my children from my Tax Credits Award when they went into higher education. As a result, I was overpaid tax credits which I have to repay. Is it true that they could collect this from my existing award? 

1st November 2014

From October 2014, HMRC will begin to claw back overpayment debts from new ongoing tax credit awards. This new process is called ‘cross-claim recovery’ and essentially means that households with live tax credit awards and with outstanding overpayments which included the same household member(s), may now have those old debts recovered from the ongoing award.

There are limits on how much HMRC can recover from your ongoing tax credits awards. Broadly, overpayments may be recovered by reducing ongoing payments by 25%, but this is limited to a 10% reduction where the claimant(s) receives maximum tax credit award (such as when they are on a very low income).

Alternatively, if you have an existing arrangement with HMRC to repay the debt, this will continue as planned.

You can read more about cross-award recovery on the Revenuebenefits website.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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