Recovery of overpaid tax credits

Produced by a Tolley Personal Tax expert

Personal Tax

Guidance

This guidance note looks at how tax credit overpayment arise, and the rules about how and when they are repaid to HMRC. Note that tax credits cease on 5 April 2025. New claims for tax credits are no longer possible and no more payments will be made after 5 April 2025. Any existing claimants will be migrated to the universal credit system. See the Universal credit guidance note. There is information about migration notice letters on GOV.UK.

Overpaid tax credits

Tax credit awards are provisional until final income figures and circumstances are confirmed to HMRC as part of the renewal process which happens after the end of the tax year of claim.

The amounts received by claimants during the tax year are initially based on income of the previous tax year, and are ‘provisional’ in the sense that the exact entitlement cannot be determined until later (as part of the renewals or finalisation process).

As a consequence, when the actual income for the current claim year is calculated and reported to HMRC, it can result in

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