I can't afford it

If you have been asked to pay the money back straight away

Empty purseIf you have been asked to pay the money back straight away or have made a repayment plan that you can no longer afford, contact HMRC or the debt collection agency dealing with your debt immediately if you cannot meet your essential living expenses like food, gas, electricity, water, and rent. You should also contact HMRC if you are a pensioner, are claiming sickness benefits, or are unemployed, and are unlikely to be able to increase your income in the future.

You can ask HMRC to:

  • Stop taking the money from you for the moment (if they do this they will reconsider this every few months). They are more likely to do this if they think your circumstances may improve.
  • Accept smaller payments over a longer period of time. HMRC may ask you some details about your income and expenditure. If you think they are asking you to pay too much, get help from an adviser (see How to find an adviser).They may be able to speak to HMRC for you.
  • Remit the overpayment. This means that HMRC will decide that they will not ask you to pay any money back at the moment. They will only do this if they don’t think your income is likely to increase in the future. This does not happen in many cases and HMRC reserve the right to ask you for the money in the future if your circumstances change so that you can make some repayment. You may want to get help from an adviser (see How to find an adviser).

If HMRC are taking money back from your tax credits

If the amount that HMRC are taking from your tax credits means you do not have enough money to live on and pay your bills, then you will need to ask HMRC to reduce the amount they are taking from your tax credits. This is called ‘hardship’.

You can apply for a reduction to the amount they are taking from your tax credits by contacting the tax credit helpline on 0345 300 3900 and telling them you cannot meet your living expenses. They will send you a form to fill in about your income and what you spend it on. You can also find the form, fill it online and send it to the HMRC through your Personal Tax Account.

If the amount you have left each month is less then £20 (called disposable income), HMRC will reduce the amount they are taking from your tax credits  so that it leaves you with at least £20 a month of disposable income. This reduction will only last until the end of the tax year, if you are still struggling to pay your bills then you will need to reapply again in the next tax year. 

If you share responsibility for an overpayment with an ex-partner

When you claim tax credits with a partner (called a joint claim), you agree that you will both be responsible for any overpayment. This means that if there is an overpayment from a joint claim, HMRC can ask either one of you or both of you to pay it back.

If you have separated from a partner, it is worrying to receive a letter asking for all of the overpayment and you might feel it is unfair that HMRC are asking you for the full amount.

You can still dispute or appeal the overpayment.

If you agree to pay the money back, you should contact HMRC to talk about how much you will pay. They should only ask you for 50% of the overpayment and should ask your ex-partner for the other 50%.

If you and your ex have agreed to pay a different amount each, you should tell HMRC.

Even though the law still allows HMRC to take back the whole overpayment from just one of you, they say that as long as you pay your share of the overpayment (normally 50%), they won't ask you for any more even if your ex partner can’t be found or is unable to pay.

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