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Tax credits overpayments - overview

You’ll be contacted by the Tax Credit Office if they think HM Revenue & Customs (HMRC) has paid you too much money.

You might’ve been paid too much because:

  • your circumstances changed - even if you told the Tax Credit Office within the 30-day time limit, you might still get an overpayment which you’ll have to pay back

  • you didn’t renew your tax credits on time - your payments will stop and you’ll have to pay back any overpayments

  • you or the Tax Credit Office made a mistake - if they made a mistake you shouldn’t have to pay back the overpayment but you might have lower payments in the future (when they go back to what they should have been all along)

HMRC usually realise they’ve made an overpayment at the end of the tax year, but they can find them at other times.

The Tax Credit Office will tell you they’ve decided what should happen next - usually how you’ll pay back what you owe.

If you think HMRC has made a mistake you should contact the Tax Credits Helpline straight away. Ask why the overpayment happened and keep a record of your call, including the date and time.

Tax Credits Helpline
Phone: 0345 300 3900
Textphone: 0345 300 3909
Welsh: 0300 200 1900
Text Relay service prefix: 18001

Paying back what you owe

HMRC will tell you what you owe and how they want you to pay back the money.

If you’re still getting tax credits

HMRC will usually keep back some money from your tax credits payments until you’ve paid them back.

Your payment reduction will depend on:

  • if the overpayment was made in the current tax year or a previous one

  • your household income

  • which tax credits you get

HMRC will let you know how much they plan to reduce your payments by. You can ask them to make a smaller reduction and pay back what you owe over a longer time - call the Tax Credit Helpline.

Sometimes HMRC realise they’ve made an an overpayment part way through the tax year. They could stop your tax credits for the rest of the tax year if they think you’ve already had all the money that you’re entitled to. Call the Tax Credit Helpline and let them know if this happens and it makes things difficult for you - there might be another way for you to pay back the overpayment.

If you’re not getting tax credits any more

HMRC will send you a ‘notice to pay’ in the post.

You have to pay the full amount within 30 days. You should contact the Tax Credit Helpline straight away if:

  • you need more time

  • you’d prefer to spread the payments

  • you can’t afford to pay anything

Instead of making payments, HMRC could change your tax code and collect the money you owe that way. HMRC have to get your permission to do this.

If you agree to having your tax code changed to pay back what you owe you’ll get a letter from HMRC. You must contact the Tax Credit Payment Helpline within 30 days of getting the letter if you change your mind.

GOV.UK explains the different ways you can repay your tax credits.

If you can’t afford to pay back an overpayment

Don’t worry if you can’t afford to pay back what you owe - call the Tax Credit Helpline and explain your situation.

They can arrange for you to pay back the overpayment in smaller amounts or, in some cases, cancel the overpayment.

Make sure you let them know:

  • if paying back the overpayment means you can’t afford your essential living expenses like rent, food, gas and electricity

  • about any family circumstances that could lead to extra living costs, for example if you’re looking after a disabled person or someone with a long-term illness

If you think the amount you have to pay back is wrong

You can ask HMRC to look at their decision again if you don’t think you’ve been overpaid, or you think the amount of the overpayment is wrong.

This is called a ‘mandatory reconsideration’.

Ask for mandatory reconsideration

To ask for mandatory reconsideration, fill in form WTC/AP and send it to the address on HMRC’s decision letter.

HMRC must get the form within 30 days of the date on the decision letter. It’s a good idea to take it to the Post Office and ask for a free ‘proof of posting’ receipt.

You won’t have to pay back any of the overpayment while HMRC looks into things.

If your request for a mandatory reconsideration is refused, HMRC will send you a mandatory reconsideration notice, explaining the reasons why. You can then submit a formal appeal to HM Courts and Tribunal service, but you must do this within 30 days. The mandatory reconsideration notice will explain how to do this.

HMRC will write to tell you if the amount you have to pay back is changing. They’ll also explain what to do if you’re unhappy with their decision.

If HMRC hasn’t met its responsibilities

HMRC has responsibilities towards you. They have to:

  • accurately record and use the information you give them, so that you get the right amount of tax credits

  • include any information you’ve given them when they send you an award notice

  • explain things to you properly, so that you understand what your award notice means

  • send you a new award notice if you tell them there’s a mistake or something missing

  • send you a new award notice within 30 days if you contact them to say your circumstances have changed

HMRC’s responsibilities are explained in full in their “What happens if we’ve paid you too much tax credits” leaflet.

You can ‘dispute the decision’ that says you have to pay back an overpayment if you agree that you’ve been overpaid tax credits, but HMRC didn’t meet their responsibilities.

Dispute an overpayment

To dispute an overpayment you need to fill in dispute form TC846 online. Make sure you explain exactly how HMRC failed to meet its responsibilities.

Once you’ve filled in the form, you need to print it off and post it to:

Overpayments Dispute Team
Tax Credit Office
HM Revenue and Customs

You can write a letter instead of filling in the form if you prefer. Your letter should include:

  • the tax year of the disputed overpayment

  • if and when you contacted HMRC before the overpayment

  • why you think the overpayment happened

  • why you think you shouldn’t have to pay back the overpayment

You have to send the form or letter within 3 months of the Tax Credit Office’s decision letter.

Your payments are likely to be reduced to pay back the overpayment. The reduced payments will usually continue while HMRC decides if you must pay back the overpayment.

HMRC will write and tell you their decision and the reasons for it. If they made a mistake, they’ll repay any money they’ve kept back.

If you’re unhappy with HMRC's decision

You should write to HMRC as soon as possible and ask them to look at their decision again if:

  • you think they haven't looked at the information you gave them

  • you have new information

If you’re unhappy with HMRC’s service

It’s best to try to sort your problem out informally first by calling the Tax Credit Helpline and explaining your situation.

If you’re unhappy with their response you should ask to speak to the complaints manager.

If you’re still unhappy with the response you can ask the Adjudicator’s Office to investigate your complaint.

You can write to your MP and ask them to refer your case to the Parliamentary and Health Service Ombudsman if you’re still not satisfied with the way your complaint has been handled by HMRC.