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HMRC internal manual

Tax Credits Technical Manual

HM Revenue & Customs
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Payment of Tax Credits: Overpayments: Recovery of overpaid tax credits

Tax Credits Act 2002 section 29(1)

Where an overpayment is liable to be repaid by the claimant or their partner (if they have one), or the both of them, the Commissioners for HM Revenue & Customs must give notice to that person or each of them.

The notice must specify:

  • the amount to be repaid; and
  • how the amount to be repaid is to be recovered.


Currently an overpayment can be repaid in one of three ways:

  • it can be treated as tax charged in an assessment being due and payable by the person(s) named in the notice within 30 days: Tax Credits Act 2002 Section 29(3)
  • it can be recovered by deduction from a payment of any tax credit under an award made for any period to the person(s) named in the notice (see TCTM08304): Tax Credits Act 2002 Section 29(4)
  • it can be recovered as if it was an underpayment of income tax for a previous year of assessment (known as PAYE coding out): Tax Credits Act 2002 Section 29(5).