How will starting a debt solution impact your credit score?
Find out which debt solution is right for youGet started
Answer a few simple questions
See if you are suitable
Understand your next steps
Tax credits are designed to help people, but having to repay overpayments has led some to say they were left coping with financial hardship.
If it has then you’re certainly not alone. In fact, new research* conducted on our behalf has revealed that nearly one in five people who claim either working or child tax credits has received an overpayment in the last three years.
A worrying subject?
Tax credits are calculated based on an individual or household’s circumstances and the income they received in the previous tax year. This means that if their circumstances change for the better, they will continue to receive the same tax credits they did previously, but will have to repay the excess the next year.
Those who have not received an overpayment are relatively unconcerned about how they would cope if this were to ever happen. Two-thirds of these revealed they were not worried about what they would do if they found themselves in this situation.
However, a third of this group admitted that the thought of receiving an overpayment of tax credits they would have to pay back the next year did cause them stress.
Perhaps they’re right to be worried. Of the people surveyed who have received a tax credit overpayment in the last three years, more than one in two revealed that they had experienced some degree of financial hardship as a result of this.
Two-fifths said they’d had a minor struggle with their finances so they could repay the excess, but more than one in 10 revealed the situation had resulted in them experiencing â€˜major financial hardship’.
Tax credits are currently in the process of being replaced by Universal Credit, which is being introduced in stages across the country. The new benefits will also replace Jobseeker’s Allowance, housing benefit, employment and support allowance, and income support.
If you’ve been left struggling as a result of repaying a tax credit overpayment, perhaps because the situation has made it harder for you to meet your other financial commitments like debt repayments, you can talk to us. We will chat through your situation with you and offer advice on what you could do next.
*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 6th June and 16th June 2014, of whom 500 were Scottish residents.
by Emily BancroftBack to blog home