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Paying back a working or child tax credits overpayment

This advice applies to Scotland

If you have a tax credits overpayment you must pay back, you should deal with it as soon as possible.

While having to pay back money can be worrying, there are lots of ways to pay HM Revenue and Customs (HMRC) - including in instalments.

If you’re disputing paying back the overpayment, you might still need to start paying HMRC back. You’ll get this money back if your dispute is successful.

If you have other debts

You should check you’re dealing with the most urgent debts first. Use our get help with your debts tool to work out if you should prioritise other debts before your tax credits overpayment.

How you’ll be asked to pay HMRC

When HMRC wrote to tell you you’ve been overpaid, they’ll have said how they want you to pay the money back.

Usually, HMRC will take the tax credits you owe from your tax credits payments. This means you’ll get less tax credits until you’ve paid off the debt.

They’ll ask you to pay them directly if:

  • you no longer get tax credits
  • the overpayment was for a joint claim and you’re now making a single claim
  • the overpayment was for a joint claim and you’re now making a new joint claim with a different partner

If you can’t find your overpayment letter, call the tax credits helpline to find out how HMRC want you to pay the overpayment back.

HMRC tax credits helpline
Telephone: 0345 300 3900
Textphone: 0345 300 3909
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm
Sunday, 9am to 5pm

Calls cost up to 12p a minute from landlines and 45p a minute from mobiles. It should be free if you call from your mobile and have landline calls included in your contract.

Make a note of the date and time you call. Also write down the name of the person you spoke to and the HMRC office they work in - for example Preston or Belfast. You might need these details if something goes wrong and your repayments aren’t changed.

If your tax credits have been replaced by Universal Credit (UC)

Without checking with you first, HMRC can ask the Department for Work and Pensions (DWP) to reduce your UC payments to pay back your tax credits overpayment.

You should be sent a letter telling you how much is being taken off your UC. You can contact your local jobcentre to ask the DWP to take off smaller amounts from your UC over a longer period of time.

If you’re happy with how HMRC want you to pay them back

If HMRC are taking the money from your tax credits, and you can manage on the reduced amount, you don’t need to do anything.

Your tax credits will be reduced from the date written on the overpayment letter. They’ll go back to the full amount once the overpayment has been paid.

If HMRC has asked you to pay them directly - known as ‘direct recovery’ - and you can afford the repayments, see GOV.UK for ways to pay. You’ll need to start paying the money back within 30 days of the date on the overpayment letter.

If you want to change how you pay HMRC

You can call the tax credits helpline to ask to change:

  • how much you have to pay back in each instalment
  • how long you have to pay the money back
  • the way you pay the money back

Changing your tax credits repayments is a good idea if you’d find it difficult to manage on what’s left once you’ve paid HMRC.

If you’ve been charged interest on your overpayment, it’s worth making larger payments, if you can. You’ll then pay less interest and save money overall.

Changing how much is taken off your tax credits

If it will be difficult for you to pay for food and other essentials, call the tax credits helpline. Ask to pay back the overpayment over a longer period of time. A smaller amount might then be taken off your tax credits each month.

Changing what you pay HMRC directly

You can ask HMRC to reduce or increase your repayments. Use our get help with your debts tool to work out how much you can afford to pay.

You can call the tax credits helpline and suggest an amount that you can pay each month - or ask to repay the money in a single payment.

If you’d struggle to pay HMRC back, ask to pay in smaller instalments over a longer period of time.

Using other benefits to pay back HMRC

If you no longer get tax credits and would find it difficult to put money aside to pay HMRC yourself, you can ask HMRC to take the money off other benefits.

Call the tax credits helpline to ask for the money to be taken from a means-tested benefit.

You’ll need to follow up this call with a letter that gives HMRC permission to take the repayment from the benefit. Make sure it includes:

  • the name of the benefit you want the payments to be taken from
  • how much you’ve agreed can be taken off your benefit and how often - the maximum is £11.10 a week
  • your full name and signature

Send this letter to:
HMRC Tax Credit Office
Preston
PR1 4AT

Paying back HMRC through your income tax

If you don’t get any other benefits, you can pay HMRC back through your income tax. Your tax code will be changed so that more tax is taken off your wages and paid straight to HMRC.

Call the tax credits helpline to ask for more tax to be taken from your wages.

You’ll need to follow up this call with a letter that gives HMRC permission to take the repayment from your income tax. Make sure it includes:

  • how much you’ve agreed can be taken off your tax and how often
  • your full name and signature

Send this letter to:
HMRC Tax Credit Office
Preston
PR1 4AT

If you can’t pay any money back

You might be able to get HMRC to cancel your overpayment if paying any money would mean you can’t pay for essentials, like rent or electricity.

It’s unusual for HMRC to do this and you’ll need to show it would be very hard for you to pay even a small amount back. For example, if you’ve got a serious health problem that means you won’t be able to return to work.

You can tell HMRC through your personal tax account. You’ll need to fill in the hardship form.

If you’d prefer to tell them by phone, you can call the HMRC tax credits helpline to explain why you can’t pay back the debt.

You should call the HMRC payment helpline to explain why you can’t pay back the debt. If you need any help, visit your nearest Citizens Advice and ask an adviser to call for you.

If HMRC agree, they’ll cancel your repayment. Otherwise, you can ask them to reduce the repayment amount or pause repayments for a few months.

If HMRC won’t change how you pay

You can make a complaint if you think HMRC have unfairly refused to change your payments.

You can make a complaint on GOV.UK or call the tax credits helpline. They’ll try to sort out your complaint as soon as possible.

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