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i This advice applies across the UK.

DWP Debt Management

Tax credit overpayments - advice

DWP Debt Management will contact you if you have tax credit overpayments.  They are part of the Department for Work and Pensions (DWP).

  • Tax credit overpayments need to be repaid
  • DWP will discuss repayment options with you
  • They may take payments from your wages or benefits

Why have DWP Debt Management contacted me?

DWP Debt Management recover overpaid benefits.

They deal with tax credit overpayments and other government debts, like:

  • Social fund loans
  • Short-term benefit advances
  • Overpaid benefits to people who have since passed away

If you:

  • Are contacted by DWP Debt Management
  • Are worried about not being able to make payments

We can help. Get in touch for free and impartial debt help.

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How are tax credits calculated?

At the end of the tax year:

  • His Majesty's Revenue & Customs (HMRC) see what you earned
  • If it is more than they thought, they may have paid you too much in tax credits
  • You  need to pay back those tax credits

Not paying has serious consequences, like with all income tax arrears.

Find out more about why some debts should be dealt with first.

You must let HMRC know if your income varies so they can adjust your tax credit payment.

This stops overpayments in the next tax year.

Let HMRC know of any changes on 0345 300 3900.

How can I pay a tax credit overpayment?

DWP Debt Management will contact you if you need to repay overpayments.

How you pay depends on your circumstances.

If you do not get tax credits or Universal Credit:

  • You are sent a ‘notice to pay’
  • Respond within 30 days
  • Money can be taken from your wages if you do not pay

If you are on Universal Credit:

  • Your benefit payments are reduced until the debt is paid

If you are still getting tax credits:

  • Your tax credit payments are reduced until the debt is paid

Reductions in tax credit payments are based on your annual household income.

If your income is under £20,000 and you get minimum tax credits:

  • Your tax credit payments are reduced by 10%

If your income is over £20,000:

  • Your tax credit payments are reduced by a maximum of 50%

A direct earnings attachment (DEA) is used to:

  • Take money from your wages or benefits
  • Use them to repay tax or Universal Credit overpayments

There is no court order for a DEA.

What happens if you do not pay back tax credit overpayments?

HMRC and DWP can take further action to recover money if you do not pay what you owe.

They may:

  • Pass the debt to a debt collection agency
  • Take you to court
  • Send bailiffs (enforcement agents) to your home
    • HMRC do not need a court order to send bailiffs or Sheriff officers
    • They rarely use this power

It is unlikely they will use these powers if you make a payment arrangement.

Contact DWP Debt Management if you cannot afford to make payments.

DWP Debt Management contact centre

  • Telephone: 0800 916 0647
  • Textphone: 0800 916 0651
  • Calling from abroad: +44 (0)161 904 1233
  • Monday to Friday, 9am to 5pm

For more information on tax credits, visit Gov.UK.

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What if I do not agree with the tax credit overpayment?

Ask HMRC to review.

  • Contact HMRC on 0345 300 3900, or
  • Complete and return a tax credit overpayments form TC846

You normally have three months to do this.

HMRC can continue to reclaim tax credit overpayments while they review your dispute.

How long do I have to pay a tax credit debt?

If you cannot afford to pay back a tax credit overpayment within 30 days, you should:

  • Let DWP Debt Management know when they contact you, or
  • Call HMRC on 0345 302 1429

You may be asked to pay HMRC directly.

That would be in one of these ways:

Over 12 months

  • You pay every month
  • For 12 months
  • They do not need more information

Up to 10 years

  • They usually do not need more information
  • You pay more than £10 a month
  • If you can only afford less than £10 per month:
    • They may still agree
    • If the debt can be paid off in under three years

Over 10 years

  • You must show a budget - we can help you put this together
  • You need to pay more than £10 a month
  • HMRC may agree to write off the debt after 10 years if it will take you a very long time to repay

HMRC may agree to put the debt on hold for 12 months if:

  • You cannot afford £10 a month and
  • It will take longer than three years to pay off the debt

They may agree to write off the debt if:

  • Your situation is the same after a year and
  • You still cannot afford £10 a month

Worried about money?

We will:

  • Create a budget based on your income and spending
  • See what you can afford to pay to HMRC and any other debts you have
  • Find the right support for your situation

Take two minutes to answer a few simple questions.