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.
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.
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:
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.
HM Revenue and Customs (HMRC) tax credits helpline
Telephone: 0345 300 3900
Relay UK - if you can't hear or speak on the phone, you can type what you want to say: 18001 then 0345 300 3900
You can use Relay UK with an app or a textphone. There’s no extra charge to use it. Find out how to use Relay UK on the Relay UK website.
If you're calling outside of the UK: +44 2890 538 192
Monday to Friday, 8am to 6pm
Telephone (Welsh language): 0300 200 1900
Monday to Friday, 8.30am to 5pm
Your call is likely to be free of charge if you have a phone deal that includes free calls to landlines - find out more about calling 03 numbers.
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.
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 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.
You can call the tax credits helpline to ask to change:
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.
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.
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.
You might be contacted by bailiffs if you don’t pay any money back. HMRC can also take money straight from your bank account if you owe them more than £1,000 - and you’d be left with at least £5,000 in your account.
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:
Send this letter to:
HMRC Tax Credit Office
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:
Send this letter to:
HMRC Tax Credit Office
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.
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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