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Why were you overpaid?

You could have built up an overpayment if:

• you didn't tell HM Revenue & Customs (HMRC) about a change of circumstance that affects your payments - such as a child leaving full time education
• your payments were based on wrong information about your personal situation
• you didn't renew your tax credits on time
• HMRC made a mistake recording the information you gave them
• HMRC didn’t act on information you gave them

If you have been overpaid, this will be shown on your award notice.

• Tax credits - rights and responsibilities Opens new window

You didn’t tell HMRC about a change of circumstance

Tax credits are flexible and change when your life changes. Not telling HMRC about a change in circumstances is one of the main reasons why people are overpaid tax credits and have to pay back the money.

When you tell HMRC about a change in circumstance, they recalculate your award for the whole year or from the time you claimed or told us about a change in circumstance until 5 April.

If you don’t tell HMRC about a change that affects your tax credits, they won’t know about it until you confirm your actual circumstances when you renew your tax credits after the end of the year.

At this point HMRC check whether the money you have received matches your income and circumstances. It may turn out that you have not received all the money you should, an underpayment. Or if you have received too much money, an overpayment, your current tax credits payments - if you still qualify, are usually reduced to repay the money.

Any change in circumstance that could mean your tax credit payments go down, such as a child leaving full time education, must be reported to HMRC within one month or you could end up with an overpayment and be charged a penalty of up to £300.

Any change in circumstance that could mean your tax credit payments go up, such as having a baby, has to be reported to HMRC. It’s better to do it straight away as the increase in payments can only be backdated by up to three months.

The checklist that came with your award notice will tell you which changes to report within one month. It’s also a good idea to tell HMRC about any other changes straight away to avoid an overpayment. You can tell HMRC about any changes in circumstance by calling the Tax Credit Helpline on 0845 300 3900, textphone 0845 300 3909.

• Tax credits: how and when to tell the Tax Credit Office about changes

Your payments were based on the wrong details

Your tax credits are based on your personal circumstances. These are things like:

• whether you’re single or part of a couple
• how many children you've got
• how many hours a week you work

So it's important you give HMRC the right details about your circumstances on your claim form.

• How to avoid common mistakes on your tax credits claim form Opens new window

You didn't renew your tax credits on time

If you’re getting tax credits, HMRC will send you a renewal pack between April and June each year. You use this to tell HMRC if your circumstances or income has changed. They can then work out whether they paid you the right money last year and whether they should carry on paying you the same tax credits during this year.

The deadline for all replies to the annual review is shown on your Annual Review form - usually 31 July. The sooner you check your details and tell us of any changes, the sooner HMRC can make sure you get the money you’re entitled to. If you don’t renew your tax credits, you may only receive payments for a limited period after the end of the tax year and you’ll have to repay any overpayment.

• Why your tax credits claim has to be renewed Opens new window

HMRC made a mistake on your award notice

When you claim tax credits for the first time, or tell HMRC about a change of circumstance, they will send you an award notice. It is their responsibility to put the right information on your award notice based on information you give them.

It is important that you check your award notice carefully using the checklist that comes with it. If HMRC have made a mistake it may mean you are not getting all the money you are entitled to, or you could be building up an overpayment.

You must tell HMRC within one month if something is wrong, missing or incomplete, they will put it right and send you a new award notice. In this case, you may not have to pay back all of your overpayment.

If there’s anything on your award notice that you don’t understand, or you’re not sure if HMRC have made a mistake, call the Tax Credit Helpline on 0845 300 3900, textphone 0845 300 3909.

• Checking your tax credit award notice

HMRC didn’t act on information you gave them

When you contact HMRC to tell them about a change in circumstance, it’s their responsibility to record the information and send you an award notice within 30 days. If you don’t get an award notice within 30 days, you should tell them immediately. In this case, you may not have to pay back all of your overpayment.

• How to dispute a tax credits overpayment Opens new window

Contact HMRC

You can contact the Tax Credit Helpline on 0845 300 3900 or textphone 0845 300 3909 (open from 8.00 am to 8.00 pm, seven days a week except Christmas Day, Boxing Day, and New Year's Day).

More useful links

• How to avoid being overpaid on your tax credits Opens new window
• Download the HMRC leaflet 'What happens if we have paid you too much tax credit?' (PDF document, 97K) Opens new window
• Help with PDF files