Do I have to repay tax credit overpayment that wasn’t my fault?

editorial image

Q: I have received a letter telling me that my tax credits have been overpaid, as my income increased by £5,000 last year.

I phoned Tax Credits as soon as I got my pay rise, so I do not think I have done anything wrong and I shouldn’t have to repay the overpayment.

What should I do to dispute this?

A: Due to Tax Credits being an annual benefit your entitlement is worked out from April to April based on the information that was known at the start of the claim.

If, for example, your tax credits had been calculated based on a wage of £15,000, but your wage then increased to £20,000, the future payments that had already been scheduled would now be incorrect and would need to be reduced. Unfortunately, in these situations it is possible to be overpaid tax credits without having done anything wrong simply because of a change of circumstances.

You would still have received too much money from tax credits and as there was no error from HMRC it would be recoverable from you.

If, however, you feel that tax credits added to the overpayment by failing to act on the information you gave regarding the pay increase then they may be able to write off part of the overpayment.

Q: I was claiming Employment and Support Allowance until a failed a medical assessment. I am appealing the decision and will be going on to Jobseeker’s Allowance, but at the minute I have no income and my Housing Benefit has been suspended. I am worried about paying my rent as I have never been in rent arrears before.

A: Your Housing Benefit claim will have been suspended due to your Employment and Support Allowance stopping as the local authority does not know what your current financial situation is, they just know that you are no longer claiming Employment and Support Allowance.

You can provide evidence of your income to the Local Authority to have the Housing Benefit restarted.

You can either provide a bank statement or complete a nil income statement for the local authority to confirm that you do not have money from anywhere else while you are waiting for your Jobseekers Allowance to be processed.

Your Housing Benefit should restart regardless of the Jobseekers Allowance progress.

Q: I have made an application for Employment and Support Allowance due to being unable to work, but I was informed that I hadn’t paid enough National Insurance and my occupational pension was too high, so I didn’t qualify for payments. I live on my own and my pension is £130 per week and I don’t get anything else. Does this mean that I won’t qualify for anything?

A: Employment and Support Allowance is paid at a standard rate of £73.10 per week while your health is being assessed.

It is then increased up to £125.55 per week if you are placed in the Support Group.

As your income is already higher than that amount, you will not be entitled to Income Related Employment and Support Allowance.