Tax Credits: isn’t it time they sorted this farce out?

June 13, 2011

It’s that time of year when thousands of families up and down the country are filling in their tax credits forms.

And it’s also that time of year when many families are told that they have been ‘overpaid’ and that they must ‘pay money back.’

I know several mums who have been in this situation: to suddenly find that the money you thought you’d been given because you were entitled to it was given to you by mistake and therefore you have to pay it back, even though you’ve spent it and paying it back will put you in a worse situation than you were in before, is an utter, total, farce.

It is beyond me why it’s not possible to get the calcuations right from the start; but it’s even more ridiculous that families should have to find money they don’t have to put right something which wasn’t their cock-up in the first place.

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  • Kairen June 26, 2011 at 8:22 am

    I have recently learnt that if you are self employed or find yourself in the situation that this years earnings are different to what expected you can request tax credits people to calculate entitlement on this years figure and not on last years figure. You may need to be persistent to get them to do this but they can do it. Also as self employed I do ring them every 3 months to update them on this years earnings instead of leaving it till the end of the year.

  • moll June 22, 2011 at 12:38 pm

    I have receieved a letter last week to repay 10,000 for my joint claim of child tax credit since 2003. Spoke with agent their this morning and I am now requesting a transcript of my calls, account history etc as this has to be some kind of a mistake. Having spent the last five years building our professional careers and not depending on the state for nothing, my husband and I receive this ludricious letter. They say, “I over estimated”, then “under estimated” all because I could not predict what I would earn in the next financial year and though I had records of updating them of any changes, it was too late as the payment calculations had been deployed by the computer system for that financial year. I am disputing it as I have never received the likes!! I am stressed to the hilt. Seven letters in one month, horrendous, how they can get away with this ridiculious system is beyond me….

    • Liz Jarvis June 22, 2011 at 6:56 pm

      OMG Moll this is absolutely appalling. Fingers crossed you get it all sorted x

  • Jo Beaufoix June 16, 2011 at 2:31 pm

    I couldn’t cope without my Tax Credits now, but Like Crystal Jigsaw says, the problem is that they’re a year behind so it all gets so confusing. We were somehow overpaid when Mr B and I were together, and now over 2 years on I am still paying it back and it’s a nightmare. If it could be done month to month or even quarterly there’s be much less likely to be a deficit in my opinion. I’m now a single mum on a low income with a debt hanging over me. It’s rubbish.

    • Liz Jarvis June 17, 2011 at 7:22 am

      It’s outrageous that they don’t take personal circumstances into account when they’re demanding repayment.

  • DD's Diary June 14, 2011 at 7:47 pm

    I must say I was really grateful for the tax credits while I was getting them, they helped me through some very dicey times… But when things improved they made me pay back quite a lot! Luckily a friend had warned me that they like to pull this stunt so I had squirrelled away a bit, otherwise I wound have been stuck. Another friend who’s an accountant looked at the papers they sent calculating my amount and said they made no sense at all …..

    • Liz Jarvis June 17, 2011 at 7:21 am

      It’s good that you had some professional advice – it makes you wonder what happens to those who don’t.

  • Fi June 14, 2011 at 9:14 am

    Oooh don’t get me started it drives me bonkers!

    We missed a whole years worth when our daughter was born because my husband is self employed and they wanted exact figures on the form.

    We were bring totally honest giving estimations and it kept coming back rejected!

    After 14 months they finally sorted it but would only back date 3 months!

    I don’t get the whole thing to be honest – we get nothing for our son (8 months) it’s all over my head!

    • Liz June 17, 2011 at 7:17 am

      Makes absolutely no sense at all

  • Abi June 13, 2011 at 7:27 pm

    I called today as I noticed since having my 2nd child 5 months ago I hadn’t had an increase in payments (surely having another child will increase your expenses) I was told that you could have 5 children and that doesnt affect your credits. No doubt I’ll receive a letter saying we owe them!!!

    • Liz Jarvis June 17, 2011 at 7:13 am

      So if the number of children you have doesn’t affect how much you get, how on earth do they work it out?! Crazy.

  • Liz June 13, 2011 at 5:25 pm

    I cannot begin to understand the logic of telling someone they’ll get more next year, when you need it now. Crazy.

  • Kara Guppy June 13, 2011 at 4:11 pm

    I am reluctant to even try and claim anything now, but fill out the forms and send them back. I am on maternity leave at the moment and hubby has taken a pay cut and have been told we are still not entitled to anything even though our combined income is well under 40k, because we earned just over last year.
    I got cheerfully told that we will get more next year, but by then I will be back at work (hopefully). We need it now.
    I understand the cuts but it’s affected the middle earners the most. We have worked hard to buy our house (a 3 bed terraced & 5 kids) yet what really upsets me is that our council tenant neighbours don’t appear to work yet can maintain and run 4 cars, have just put a conservatory and a canopy on the back of their 3 bed house (a couple with grown up kids not lliving with them). We are struggling to run one car!
    Sorry, I’ve just gone off in a tangent again. Rant over ;0)

  • Multiple Mummy June 13, 2011 at 1:41 pm

    I have been lucky up to this point and have not had to pay anything back. I hope that this will remain the case. I find that the system is just odd and I get very upset by the whole situation. I am currently a Stay at home mum – I am lucky that I get to witness my children growing up and am cherishing every moment, but this has not been a choice. I have been forced to stop working following the birth of the twins, because three in childcare is more than my salary. I find it crazy that when I played it by the rules, paid my own way through uni and went into a profession that there is a shortage of (science teaching) that I cannot work. In order to get a home which is a lovely but medium 3 bed semi, we had to base the mortgage on two wages. Everything now has to be paid for from one wage. It makes things very tight. Manageable but tight. I am not pleading poverty…my hubby is an assistant head but his salary is equal to us both on a £23,000 salary. It is not a great family income…to add insult to injury, because he is higher tax bracket now, our family allowance will be stopped, leaving us £180 a month worse off. It would not bother me if it was based on family income (it would be rubbish but fair), but it does not seem fair that we could both earn £39,000 and still get it! (Not that £39,000 would cover childcare, and I was far from that!) Anyway mini rant over, and I know I have gone off an a tangent, so apologies!


    • Liz June 13, 2011 at 5:28 pm

      It’s just nuts. You’re trying to do your best for your family and not be dependent on the state and this is how you’re rewarded.

    • Elaine June 13, 2011 at 5:43 pm

      I agree with the family allowance – we’re in the same position – I’ve got friends who both work part time so have no childcare costs who still get it despite having a family income more than ours… and the joke is that the government says it can’t be worked out on joint income as there is no taxation system in this country for couples – well how do they manage to do the tax credits on joint income then???

  • Kate June 13, 2011 at 1:13 pm

    Also does not work well for people in third sector/voluntary and community organisations/charities who are usually on short-term contracts and lurch from one redundancy to the next. I also have a huge demand letter for overpayment with no facts about how they have calculated this at all so I am not replying. They can do their worst as life will still as it does go on

    • Liz June 13, 2011 at 5:27 pm

      There doesn’t seem to be any consideration of how your income can fluctuate in the current climate. It’s ridiculous.

  • LauraCYMFT June 13, 2011 at 11:46 am

    OMG Kara, how awful! They’ve managed to overpay us but at the time we were entitled to the money and yet because we both got pay rises and bettered ourselves we’ve put our earnings up and ta da – overpayment! Luckily we’re still entitled to tax credits so they’ve just stopped our payments until we’ve paid back the overpayment but honestly, it’s a really messy, complicated award and I can see why people are reluctant to tell them about changes or just to lie full stop. I’m losing £45 a month and to be honest, I don’t know whether I’m going to claim it once the overpayment is paid back – more hassle than it’s worth!

    • Liz June 13, 2011 at 5:22 pm

      I almost wonder if they make it as complicated as possible to put people off claiming in the first place.

  • Crystal Jigsaw June 13, 2011 at 10:17 am

    The main problem with tax credits, in my opinion, is that they are calculated on the previous year’s income. What use is that? If you’re self-employed like I am, have a crap financial year and you’re stuffed. For example (I’ll use fake figures here for confidentiality), you make £20k profit in 2009 but only £10k profit in 2010. Your tax credits are taken from the previous year which means in 2010-2011 you will be paid relevant amounts to balance the £20k profit, not the £10k profit, which means your payment won’t be enough to support you. In 2011-2012 they will go off £10k profit which means your tax credits will increase – but you might have made a big better profit in 2011 and don’t really need the giant increase in tax credits (okay, it’s nice to receive it) but then the following year, they look at your profit accounts and see that you’ve been paid £50 a week more than you needed to be paid so they’ll take it off you.

    And that’s where the problem lies; You might make a loss the following year but they will still take the money off you that they calculated they had overpaid. Which means, in a nutshell, you’re up shit-creek.

    I’m fortunate; my accountant does the tax credit forms and I just sign it! But as we made a decent profit in 2009 and again 2010, I suspect our tax credits will be hugely reduced this year.

    Also, because Amy is disabled, I get a little extra in my payment for disability. In 2009, our tax credits went from £8 a week to £80. How on earth they work that out I have no idea. But even my accountant who has worked for this farming business for 30 years, is completely dumbfounded at the way they are calculated.

    CJ xx

    • Liz June 13, 2011 at 5:20 pm

      It’s just a total farce, isn’t it?

  • Elaine June 13, 2011 at 8:40 am

    It’s a complete shambles… We’ve been sent a demand for £100 – I’m pretty sure that we paid it before as we stopped receiving tax credits to pay it back as it’s from *years* ago and we haven’t claimed any for at least the last two as we knew we wouldn’t be eligible… must phone today…

    • Liz June 13, 2011 at 5:20 pm

      ooh good luck, let us know how you get on!

  • Kara Guppy June 13, 2011 at 7:22 am

    You can imagine my horror when 4 years ago a letter dripped through my door saying I had been overpaid by the sum of £12,650 for 2003-2005!
    I had always been so good at telling then any changes etc and there had been a computer issue during this time which meant I had to go to my local tax office to pick up my tax credits every month rather than just getting a payment into my bank!
    To cut a long story short, I contacted the Tax office who said I didn’t owe the money, they knew it was a mistake because of a computer problem and I had to fill out an appeal form. They LOST the first 4, so I was being chased by the debt collection dept on and off until this year. I had meetings with my local Office, provided P60’s etc during this time.
    It was finally sorted in January, after a demand for 12k in December. They admitted it was due to a computer cliche and I even got a rebate of £100 for that period.
    Even though I knew it was a mistake it was so stressful. Debt collectors are not understanding people and are rude and obnoxious. The amour of calls I has to endure explaining the situation again and again!
    My advise to anyone in this situation is to challenge it and get advise from the CAB!

    • Liz June 13, 2011 at 5:18 pm

      such a stressful situation, ridiculous. Thank you for sharing your experience x