| The Inland Revenue
is trying to recover millions of pounds of overpayments it paid
to families receiving tax credits.
In April 2003, the government launched
its revolutionary new tax credits. These are a generous benefit
for families and many people have welcomed them. However, they have
one unwelcome feature, never before seen in the benefit system:
the overpayment.
This means many who received tax credits,
perhaps over a year ago, will now be asked to repay part of the
money they originally received.
In the past, the government only required
benefits to be repaid where an individual had been economical with
the truth. But with tax credits, overpayments are an intrinsic part
of the system.
This is because tax credits paid in
the year to 5 April 2004 were based on an estimate - usually your
income for the year to 5 April 2002.
Overpayment Rules
By 30 September 2004, the Inland Revenue
should have received details of your actual income for the year
to 5 April 2004.
And, as you read this, behind the
scenes, Revenue computers are churning away, comparing your actual
income with the estimate on which your tax credit claim was based.
This is what happens next:
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If your income in the year
ended April 2004 was less then the estimate on which your
tax credits were based, the Inland Revenue will not claim
back any tax credits, the Inland Revenue will normally pay
you the difference. |
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If the income was greater, but by £2,500
or less, the Inland Revenue will not claim back any tax credits. |
| - |
If the difference is greater then this,
then you will be expected to pay some back, probably over
a period of time. This is likely to come as a shock to many
low- income households. |
The overpayment position will be worse
than expected because, in the spring of 2003, the Inland Revenue
made a significant error, paying out £94 million more in tax
credits than they should have done.
Of this, the Revenue has announced
it has written off £37m or 373,000 cases where money overpaid
was worth less then £300.
The mistake has only just been made
public, along with the news that they are seeking to recover £57m,
comprising larger overpayments from around 82,000 households.
However, repaying the Revenue may
not be necessary.
If you do not know if the overpayment
is correct, the only solution is to call the Inland Revenue’s
Tax Credit Helpline. Your local Citizens Advice Bureau may also
be able to help.
SOURCE: BBC News
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