Working Tax Credit overpayment

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    Where current WTC is reduced due to last year’s overpayment we can use the net figure to calculate HB/CTB. For last year’s assessment we use the gross figure. This seems unfair in a case we have where the claimant has repaid the WTC overpayment in full so her income for this year will not be reduced so she will not benefit from increased HB/CTB.
    There does not seem to be any way round this in the regs?


    Sorry, but not as far as I’m aware. TC to be used in full in your case.

    Do I know what I'm doing? The jury's out on that........................

    Kevin D

    I agree with Mark.

    The general rule for income is that is must be attributed to the period it is in respect of. However, Tax Credits is an exception: [b:3656fdfcf1]HBR 32[/b:3656fdfcf1] specifies how payments of tax credits must be treated.


    If you recall, prior to Tax Credits being introduced the Inland Revenue attended a number of HB events to tell us about their wonderful new system.

    At the time they stressed that the word “overpayment” did not exist in the Revenue’s dictionary. Rather there would be “adjustments” as apply in PAYE. Therefore if the award was wrong one year, it would be adjusted in the following year.

    Hence the fact that our Regs were written to specifically prohibit the use of notional entitlements in assessment and, on their original wording, you had to take into account the amount of Tax Credits paid in respect of a particular week.

    The problem now is that IR have not stuck to that way of working but our Regs have been amended still assuming that the person’s award is being adjusted [HBR 40(6)].

    They make no allowance for lump-sum repayments.

    Yes, its inherently unfair. But then we are talking about the Tax Credit system at the end of the day, which is run by people who were only ever used to taking money off people, not giving it out.


    This issue was discussed so many times with DWP that if I had a £10 note for each occassion I would be ……well, I could afford to buy you all a drink when I leave Camden tomorrow (LOL)!

    It is very unfortunate that if the customer pays back the tax credit overpayment directly, they are still assessed on what they get in tax credit in full. Oh and someone who received tax credit and HB/CTB last year but is deemed not to have been entitled to it at all gets a double whammy ….

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