Tax credit overpayment disputes: steps and deadlines

Tax credits ended on 5 April 2025, but an overpayment from an earlier award may still need to be resolved. Check what the decision says, why HMRC says you owe money and which challenge route applies.

Why can an overpayment happen?

An award could have been based on incomplete information, a change in circumstances or an error by you or HMRC. Being free of blame does not by itself settle whether recovery is correct. Ask HMRC for a breakdown and compare it with your award notices and records of reported changes.

Am I challenging entitlement or recovery?

If the amount of tax credits you were entitled to is wrong, the route can involve mandatory reconsideration and then an appeal. If the overpayment calculation is accepted but you believe you should not repay because you met your responsibilities and HMRC did not, use the recovery-dispute process. These are different procedures with different deadlines.

How do I dispute recovery?

Use the current TC846 online or postal process. Explain the mistake, what you told HMRC, when you reported it, and why you reasonably believed the payments were correct. Include copies of relevant evidence.

The normal dispute deadline is three months from the relevant notice. Special rules apply after a reconsideration, and you should explain any late request. Follow the dates in your correspondence and HMRC’s dispute guidance. Do not assume that every disagreement uses the same three-month limit.

What happens after the decision?

Read the reasons and the route for asking HMRC to look again or taking a further challenge. An entitlement appeal and a review of recovery are not interchangeable. If you are unsure, get benefits or debt advice promptly; do not wait for a payment complaint to resolve before checking a challenge deadline.

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Do I have to keep paying while I challenge it?

A dispute does not automatically stop recovery. Ask HMRC or DWP, as appropriate, to confirm the position. If repayment is unaffordable, explain your income, essentials and other debts and ask about an affordable arrangement. Check the current tax-credit overpayment guidance.

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Recovery can be through DWP where an overpayment has transferred, including deductions from Universal Credit, or through direct arrangements with HMRC. There are no ongoing tax-credit awards from which new deductions can routinely be made. Do not ignore an official recovery notice.

Does an old overpayment disappear after six years?

Do not assume that ignoring contact writes off the balance. Limitation rules depend on the debt, jurisdiction, previous payments or acknowledgments and the recovery method. HMRC’s limitation guidance distinguishes tax-credit overpayments from ordinary tax debts. Administrative recovery can differ from court proceedings. Seek advice before paying or acknowledging a debt if limitation may matter.

What if a collector contacts me?

Check the collector’s identity and authority using contact details from official correspondence or the current government guidance. Caller ID alone does not prove who is calling. Ask for the account details in writing if needed. A debt collection agency does not have bailiff powers merely because it contacts you.

Where can I get help?

A free welfare-rights or debt adviser can check the decision, identify deadlines and help with a budget. Keep the original notices and a dated record of calls, letters and evidence. Do not delay responding to a court document while waiting for informal advice.