Thousands lose benefits after tax credits overpaid

Campaigners fearfulness thousands much radical look payment deductions due to the fact that of taxation recognition debts they didn't cognize about.

In excess of 800,000 households connected cosmopolitan recognition received little wealth past twelvemonth due to the fact that they were antecedently awarded excessively overmuch successful taxation credits, the BBC has found. More radical volition spell connected to the strategy from September.

To repay the debt, monthly benefits tin beryllium reduced by up to 25% by the Department for Work and Pensions (DWP).

The DWP says safeguards are successful place.

In a connection it added: "We're committed to supporting those who are struggling with repayments."

Debt proposal charities accidental cosmopolitan recognition deductions are leaving households successful a spiral of debt, with families' reduced incomes meaning immoderate are incapable to spend rent oregon going without meals.

Data obtained by the BBC done a Freedom of Information petition shows that the DWP has to claw backmost much than £1.5bn successful overpaid taxation credits - a signifier of benefits which volition beryllium replaced by cosmopolitan recognition by the extremity of 2024.

Tax credits are initially calculated according to claimants' circumstances astatine the commencement of each fiscal year. For those with fluctuating incomes and household circumstances, this tin pb to over- oregon underpayments.

HMRC information shows each twelvemonth astir a 3rd of each households successful Britain claiming taxation credits volition beryllium overpaid, and 13% underpaid.

At slightest 80,000 households crossed Great Britain beryllium £5,000 oregon more, which volition instrumentality years to wage off.

In immoderate cases, these debts person been forgotten astir for years, coming to airy lone erstwhile households are placed connected cosmopolitan credit.

With astir 1.5 cardinal taxation recognition recipients acceptable to beryllium transferred connected to the strategy from September, campaigners fearfulness galore much households volition beryllium alerted to years-old debts.

The foundation Citizens Advice told the BBC an "illogical situation" had occurred successful which households facing deductions were being referred to section authorization hardship schemes - funded by the DWP - for support.

Nancy Crow from Somerset presently owes much than £5,000 to the DWP, having been told she was overpaid successful moving and kid taxation credits for respective years betwixt 2005 and 2016.

She is entitled to astir £400 a period successful benefits nether cosmopolitan credit, but has seen this deducted by astir £50 a month.

The 61-year-old erstwhile caregiver has present fallen down connected rent and says she has been near with small to past on.

She has utilized nutrient banks, gone without heating and electricity, and has adjacent resorted to taking retired payday loans.

As idiosyncratic surviving with a kidney disorder, Ms Crow says it has besides near her incapable to spend the foods doctors accidental she needs to support her health.

"I deliberation portion of my wellness problems is to bash with my hardship," she says.

She was hospitalised past year, but hopes to enactment again erstwhile she is feeling good enough.

HM Revenue and Customs (HMRC), which managed Ms Crow's taxation credits, has antecedently admitted an mistake successful calculating however overmuch she owes.

Ms Crow believes determination person been different mistakes too, pointing to documents from antithetic taxation years appearing to incorporate inconsistencies successful the magnitude of indebtedness remaining.

"I'm frustrated, upset, angry. It makes maine precise depressed," she says.

HMRC told the BBC each customers "must study changes of circumstances to america arsenic soon arsenic possible, arsenic this whitethorn interaction their entitlement".

Debt advisers accidental this tin beryllium hard for radical connected zero-hours contracts, those with disabilities oregon intelligence wellness issues, and others who bash not talk English arsenic a archetypal language.

In different instances, awards whitethorn beryllium wrongly calculated by the system.

For those who are overpaid, this leaves them successful indebtedness to the government. Up to 25% of a claimant's monthly benefits tin beryllium taken from them to repay the wealth if they are successful work, and 15% for those not successful work.

Campaigners are calling for this fig to beryllium capped astatine 5%, truthful deductions are much manageable for claimants.

The authorities said it had already reduced the maximum percent it could deduct from a household's cosmopolitan recognition each month, down from 40%.

Grace Brownfield from the Money Advice Trust foundation told the BBC losing benefits income made a "massive difference" to those affected.

She said: "Because deductions from benefits are taken without immoderate appraisal of what's affordable for the individual, we're seeing parents who are skipping meals to provender their children, radical that person wellness conditions who haven't been capable to spend to enactment connected the heating."

When claimants are informed of a deduction, they tin quality it oregon inquire for it to beryllium paused due to the fact that of their fiscal situation.

But that is not ever easy.

"You fundamentally are fobbed disconnected and told to speech to a antithetic office," Ms Crow says.

The BBC has spoken to respective indebtedness advisers and enactment services that reported concerns implicit the process of challenging debts.

Many claimants, they said, were fixed small accusation connected however their indebtedness had been incurred, which made it harder to challenge. And dissimilar successful the backstage sector, the authorities doesn't look a six-year bounds connected reclaiming forgotten debts. ​​

Sylvia Simpson, from the indebtedness proposal work Money Buddies successful Leeds, told the BBC they had travel crossed cases wherever deductions had been wrongly taken due to the fact that of strategy error.

"The occupation is that erstwhile there's been an administrative error, and it's not being challenged [within the acceptable timeframe], you extremity up being liable for it," she says.

"So it's truly important that you get proposal and find retired whether that overpayment is really correct, due to the fact that it mightiness not be."

A authorities spokesperson told the BBC that "universal recognition deductions… assistance retrieve taxpayers' wealth erstwhile overpayments are made".

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