Although tax credits are generally regarded as a form of a benefit, once your credit is not being renewed, due to circumstantial changes, or changes in your income you will have to count on having to start to pay back the credit your owe. There are several ways of repayment and we would like to discuss this in this current chapter.
First of all, it’s important to note that a minimal reduction would occur also by the time you are receiving a credit. This is how this looks like:
If your yearly income is GBP 20000 or less which entitles you to the largest amount of bank credit, the HMRC would automatically reduce the total sum by 10% as means of repayment. This way you get money but you also start to pay it back.
If your yearly income is less than GBP 20.000 and you do not get the maximum tax credit then the reduction will be 25% of the total sum
If your salary surpasses GBP 20.000/year then the reduction will be 50% of the total sum.
When your tax credit is not paid for your any longer, then HMRC would automatically assume that the payment stopped because your income situation has become better. Therefore they will soon send out a notice to pay, giving you 30 days to start with the repayment. In case you are still not in the situation to start paying back and you have only missed the renewal deadline, then let HMRC know that you are still in the process of getting tax credits. This way you avoid the repayment up until the point where you can actually pay the sum back. Another option is to opt for a partial monthly payment. If you call the helpline of Tax Credits which you can find on the website of the governmental website then you can opt for more options on repayment. However you will need to have all your salary and credit related paperwork at hand.
When it comes to you being ready to repay the sum of the credit you have received make sure of the following:
Use your tax credit reference number and always type it in the payment reference section. You can find this reference number on your „Notice of pay”
If you pay by wire transfer this may take a couple of days to reach HMRC but if you pay with Fast Payments service, payments generally are bound to arrive on the same day.
If you are to repay using an overseas account then make sure you are well aware of the IBAN account number, the BIC ( Bank Identifyer Code) and use your account name as well. This way booking the sum will be way faster and easier.
If you are paying from a foreign bank account, make sure you have the postal address of HMRC because you might be asked to provide that too on the payslip.
You can also pay by cheque only make sure you include the HMRC payslip.
Check out the official Tax Credit website for a more detailed information on payment options and methods.