Tax credit demand time is here...what a
TARANTULAS crawling over your face . . . Hitchcock's Psycho . . . tax credit overpayment letters. All three are truly terrifying thoughts.
But the scariest for countless Brits at the moment is that prospect of a demand from HM Revenue & Customs.
The tax credit renewal deadline is now six weeks past - and, if it is anything like previous years, up to a MILLION people will soon find out that they have been overpaid.
It may sound good, but those people will be asked to give back some of the cash already received . . . which ain't so easy if it's been spent.
So all tax credit recipients should read this Q&A guide NOW.
Because if that dreaded letter arrives, you've only a small time-window to act in.
The information on this page will arm you with your rights - and ensure that you don't end up paying for the taxman's mistakes.
WHAT ARE TAX CREDITS?
The ugly name adds to the horror, and is misleading - as it has no longer got any relation to tax.
Instead it is a direct payment to bank accounts, either to help families with children, or to try and ensure that people on low salaries remain better off than they would be on benefits.
The system is over-complicated, confusing - and has had more teething troubles than six-month-old sextuplets.
However, the cash paid to people can be HUGE. Just the average payout for childcare help is £3,500 a year (to find out how to claim, see www.moneysavingexpert.com/childcare ), which balances out the hassle.
WHY DO OVER- PAYMENTS HAPPEN?
It can be through NO FAULT of your own. Each year tax credit recipients are mailed a "renewal pack" to check by July 31. This pack contains the estimated amount you should receive for the next year and checks whether the estimate was right for the last year.
But with tax credits being so complex, even small changes can massively alter your eligibility without you knowing.
And if you have been getting too much, the tax people are now writing to you to ask for it BACK.
MUST I REPAY?
IF you didn't let them know of changes, usually within a month of them happening, the Government is entitled to reclaim the cash.
Yet if you correctly notified Her Majesty's Revenue & Customs, and they made a mistake, then any excess cash paid because of the error is YOURS to keep, as they failed in its responsibilities.
Of course there may be an issue with evidence, which can turn tricky.
HOW DO I CHALLENGE OVERPAYMENTS?
The bureaucracy doesn't stop. Ridiculously it is down to you to decide what category your challenge is.
They are as follows:
DISPUTES - It's a dispute when you gave the right info but the tax people bungled.
For example, if you told them of lower childcare costs but they kept paying you the higher amount.
APPEALS - You must appeal within a month if you disagree with the amount paid.
For example, if you've been correctly paid tax credits for three children but the taxman wrongly thinks you've only got two eligible kids so says he has overpaid you.
To complain, there are forms to fill in. Give as much info and evidence as you can, explaining why you shouldn't repay.
Detailed help in challenging overpayments can be found at www.moneysavingexpert.com/taxcredits
If you don't know why you were overpaid, because nothing has changed in your circumstances, then that is reason for a dispute in itself.
Call the Tax Credits Helpline straight away on 0845 300 3900, and ask for an explanation.
WHAT HAPPENS IF I CAN'T AFFORD TO REPAY?
If you have to repay and you're still getting tax credits, you are likely to simply see your future payments shrunk by around 10 to 25 per cent.
But if you are no longer getting tax credits (either you're not eligible or didn't renew correctly), the letter may ask for the ENTIRE AMOUNT in a lump sum.
Don't panic - just call the helpline. There's usually some leeway to spread payments over 12 months.
And if you're in dire straits, you could get even longer or the debt may possibly just be wiped.
WHAT IF I HAVE BEEN UNDERPAID?
Here is the good news - as many people have been underpaid as overpaid.
If this happens to you, once your renewal has been processed, you should be given cash.
If not, contact the Tax Office Helpline on 0845 300 3900.
HOW TO PREVENT FUTURE OVERPAYMENTS
THE simple rule is if anything changes - your income, job, cost of childcare, relationship status, anything at all - call the tax credit office immediately and TELL 'EM, TELL 'EM, TELL 'EM!
Take a note of who you spoke to, the time of the call and what you said - in case you later need evidence.
Sadly, some families call the helpline to report changes and are told they didn't need to - then later find they've been overpaid.
I warned the Treasury Minister responsible Stephen Timms that this is happening and he wants to follow it up, so please let me know if it's happened to you at notw@moneysavingexpert.com
SHOULD I GET TAX CREDITS?
EVEN families earning up to £66,000 may qualify for some cash.
Check if you're entitled, using the Government's detailed calculator at http://tiny.cc/shJ07
It is clunky but it does the job. Or get a quick check up at www.moneysavingexpert.com/taxcredits
* TV Money Guru Martin Lewis is the creator of the Consumer Revenge website www.MoneySavingExpert.com which is packed with info on how to get more money in your pocket.
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This article has 17 comments
I take home £1000 per month (sound a lot) not!!! By the time you've paid the mortage, gas elec, water all the household bills and I have to run a car as I couldn't GET TO WORK there's just nothing left for the luxuries like FOOD, clothes not even having my hair cut. I tried applying for Working Tax Credit and they said I wasn't entitled as my income was too high. I'm trying to keep my head above water but I'm sinking fast. I have to rely on my dad to help out with his pension. Surely something is wrong here???
By Gail Phillips.. Posted February 6 2010 at 1:00 PM.
i am paying an overpayment of 5,000 wich will be finished October next year, i came of tax credit when my partner moved in 3 years ago. I have just recieved bills of overpayment of 16,000 pounds which was every single payment of tax credit i had recieved when being single, i have put in a appeal, and asked for an explanation of this overpayment, no one seems too know. it's been 2 months and they still have not got back to me.
By debbie .. Posted October 29 2009 at 12:48 AM.
Would a single mother in prison with five chidren taken into care be entitled to Child Benefit and Tax Credits. I believe Child benefit is payable for 8 weeks then stops. Tax Credit unsure.
Cannot find any written information.
Please advise.
By Eileen Piper.. Posted October 23 2009 at 2:50 PM.
Tax credits made and error and it caused a fault in their system. I then recieved manual payments. I received an overpayment, but there was two assessments going on where i was owed money.
Even though tax credits didnt not follow any of their procedures, the error was theirs they now say they cannot look into my complaint about them or the overpayment due to a fault in their system which caused the overpayment. I have this incorrect debt hanging over my head indefinately until they sort their system out, this cannot be right are they allowed to use this as an excuse, surely they have to follow adequate time scales. how do i deal with this as its affecting my health, if they cannot address this problems, surely its obvious i shouldnt be held responsible for their overpayment.
By julie.. Posted October 14 2009 at 2:25 PM.
I'd love to know how the VERY RUDE people at the tax credit office have the cheek to tell me that I've been overpaid when my award notice was £0.00 and because I've NEVER reapplied to tax credits {as I thought it wasn't worth it after having been refused once I didn't want to be refused again} they just keep on file details of any application made then they keep on making awards for and "allegedly" paying them into an alledged account? The tax credit office is full of liars and I for one WILL NOT be paying back any monies they say that I owe because unless they tell me how I can pay back something I've never recieved I can't see they've go a leg to stand on. If any managers from the tax credit office are readining this I suggest you train your RUDE staff to use the phones properly as when people are told they'll be put on hold and are actually cut off it's very fustrating as it takes TEN BLOODY MINUTES for them to answer the call and then they haven't got a clue what they're going on about. Yes I'm ranting because I'm fuming with this sham government and it's dodgy dealings and outright harrasment of hardworking public who just want a bit of help with childcare fees. Mr Brown I'd love you to pay my £700.00 p/m nursery fees from a £1200.00 p/m wage before any other outgoings? When you have the answer please send then to WFTC, addressed to Muppet In Charge. Oh sorry that'll be you.
By Claudine.. Posted September 30 2009 at 7:59 PM.
I actually appreciate this system. I fill in my paperwork, notify them of any changes and agree with the amount that i am being given. I accept their help, as i work and require the money to put my child in nursery care. The paperwork is long winded and confusing, but tells me what i am being given and when quite clearly.
Perhaps some of the people that are complaining are claiming too much in the first place and being a little bit greedy!
By sarah.. Posted September 27 2009 at 5:12 PM.
I do not know of one person who has stopped this benefit without owing them mases of money. take me I informed them I was starting part time work the date and wage. then sent payslips off and letter to stop paying me 2 months later I get them sent back needing more info. I then take a full time posiiton and tell themagain I am then hit with a 4000 grand over payment from december I only started work at easter. I would rather starve than go through this hell again. I have 12 months topay this back...I am only just earning what they were paying me in the first place? so basicly the family will starve.. I have no problem in paying back an overpayment and will but think it unfair when they made a mistake and are now telling me the fault is mine...They need to fix this mess Labour has lost another voter... and no doubt the systemwill change again after the next election when someone else goes in and sees the mess and tries to fix it.
By sarah.. Posted September 27 2009 at 7:33 AM.
The whole system needs overhauled & simplified. If there was a reliable way of knowing what someone was entitled to who earns xxx/year, has xxx children and pays xxx childcare etc it would be downright obvious if anything was wrong with the award. But that's just the thing- THERE ISN'T!! We are completely reliant on helpline staff correctly inputting information then waiting for HMRCs bug-ridden computer to spit out the amount that it deems appropriate... for the time being. Even the 'helpline' staff are unable to tell claimants exactly how it is calculated and when ringing up to notify them of a change in circumstances, can't say how the award will be affected. As a (reasonably) intelligent person the only things I know to be correct are my personal details and circumstances- the pages and pages of figures mean NOTHING to me. Goodness only knows how the truly vulnerable people in our society cope with this unnecessarily complex system.
By jenni.. Posted September 23 2009 at 11:23 PM.
The Government have refused to address the scandal of Tax Credit overpayments for years now. The problem is being ignored, and Opposition MP's are being 'misled' in the House of Commons by cleverly worded answers given by Treasury MP's and officials.
The reason for this is that Tax Credits are Gordon Brown's 'flagship' policy, and if the truth was known it would mean that Labour have achieved absolutely nothing positive whilst they have been tirelessly working to ensure the destruction of Britain. I accept the blame for my part in all of this - I was a Labour voter. Note the 'was'! Never again will I vote for the Party that has allowed lying, incompetent and dishonourable MP's to serve in their name.
To date, some 8 million Tax Credit claimants have had their lives ruined by making the mistake of claiming this 'benefit'. More and more claimants are afraid to claim, yet find they can not get out of the system - there is no policy or procedure in place to allow claimants to escape.
Thank heaven for 'Tax Credit Casualties' and their help.
One day, this nightmare will be sorted out - but it won't be by the Labour ostriches! The sooner they're sent packing, the better!
By Graham.. Posted September 23 2009 at 12:05 AM.
Tax credit overpayments are truly horrendous, and the bullying tactics of HMRC to recover money on Gordon the Gorgon's behalf must be experienced to be believed. Google "Tax Credit Casualties" for another great source of support, as well as the Moneysaving Expert, and please, PLEASE tell your MP that enough must now be enough!
By Ali.. Posted September 22 2009 at 6:18 PM.
Both my children are now to old for us to claim tax credits ,what do they think then happens,that we are better of {no] that both my children will get good jobs that will help pay there keep and help us [ its not very likely] do the tax credit people know there is a reccession and that everyone is strugling to get by at the moment and having them demanding money at this time isnt very helpfull take my advice keep going to your cit advice they know how to talk to these people and give you some breathing space to try and sort things out.
By alan .. Posted September 22 2009 at 6:16 PM.
its people like myself that shud be angry i am 56 worked since i was 15 applied once for tax credit they never even bothered sending the app form . these people who were over paid knew that money was not theres to spend why are they so surprised that they ave to pay it back ?
By ann.. Posted September 21 2009 at 7:05 PM.
Tax credits ARE A JOKE- They overpaid me now they want to take back £8,000 when i sent off paperwork- they are a JOKE and the system needs looking at- Because of their stupidity my children are now suffering. What a joke- money for children-well their taking money out of my kids mouths now!
By manda.. Posted September 20 2009 at 10:56 PM.
I rang the tax credits twice to tell them i was being overpayed they then sent me an exemption card for free wigs, teeth and prescriptions an kept telling me everthyn was fine and it would change in april.
I now owe thousands its a joke what a systwem!
By Erica.. Posted September 20 2009 at 9:07 PM.
I was overpaid, by £7,000 They want the whole lot back that I was paid before I moved in with my partner. I had informed them that I was moving in with him and they said I had not told them and they want it back. I can't afford to pay it back and I am too scared to apply again.
I know they will let me pay it off gradually but I will only start to pay it back when they stop giving it to non Uk residents who can claim for kids back home in Poland, Romania etc that they dont even have to prove exist. This money is not even spent in the UK just sent back home so that affects our economy too.
They can shove me in jail for all i care now, because I have worked and paid my dues all of my adult life,( I am 45 yrs old)never claiming for anything and the one time I did, through no fault of my own, I get lumbered with this bill.
To put me in prison will only stop me from working and paying my taxes in the future.
By Diane.. Posted September 20 2009 at 6:21 PM.
Tax credits are a joke. I have informed them of every penny that has ever changed in this household from day but yet every year i have been over paid. Now my eldest daughter is 16 and at college its even worse!!! They said my payments would go down when she left school then go back up or the lump sum back when she started college neither has happened. I told them i started work in january. But my overpayment will start next tax year!!!! I keep telling them but they say no they have to go on last years earnings which are £6000 less because i started work this year. Its rediculous the system it doesnt work and never has. I dont know of anyone who hasnt been over paid and this rubbish of you can earn up to £60000 are rubbish.... our income is £29000 with 2 children and we will get £12 from next tax year......... what a laugh.....
By sharon.. Posted September 20 2009 at 4:12 PM.
yeah but someone single bringing home £950 per month gets £0.00p working tax credit great isnt it -and still pays the bills - hmmmmm maybe if i have a child or 4 lol
By helen.. Posted September 20 2009 at 1:34 PM.