Tax credit overpayments have fallen below £2bn

A total of £1.8bn was overpaid in 1.96 million claims, compared to £2.2bn paid out in 1.88 million claims in 2003/04.

But the government says once new measures are "fully implemented", it expects to reduce overpayments in future years by around a third.

The new measures first take effect during the 2006/2007 tax year.

The government has said people will not be forced to give back money as long as the overpayment is the government's fault.

It has also promised that a much bigger rise in family income will be required to trigger a clawback of overpayments in the future - although that is still likely to leave many families facing demands for repayments.

'Significant hardship'

The Treasury says the value of overpayments has fallen by more than a fifth since the first year of the operation.

CAB experience is that the recovery of overpayments has caused significant hardship to many families Citizens Advice Bureau Q&A;: Tax credit problems Readers' tales of woe

"The 2005 pre-budget report set out a substantial package of further measures, " it said.

Citizens Advice has warned the situation in the past has seen people on low incomes borrow money to buy food and being threatened with eviction, because of having to return overpayments.

"Last year, Citizens Advice Bureaux across the UK advised on around 150,000 tax credit problems," Katie Lane from the charity said.

"CAB experience is that the recovery of overpayments has caused significant hardship to many families as payments have stopped without warning or explanation."

'Flexible' system

The Liberal Democrats have said the whole system needs to be reformed, and the minister in charge, Paymaster General Dawn Primarolo, should be sacked.

"It is surely now time to replace the paymaster general, who through oversight, incompetence, or complacency has presided over a broken system rife with incorrect payments and fraud," Lib Dem spokesman David Laws said.

Mr Laws said the system needed to be overhauled, with payment levels fixed every six months to remove overpayment problems.

That would mean scrapping the current system which takes account of alterations in people's incomes.

The government says it wants to retain a "flexible and responsive" system, rather than fixed payments, so the level of credits matches families' changing needs.

Below is a selection of your comments:

Apparently I have been overpaid £1600 I don't know how as I have rang them several times to tell them my income had changed and the operator on the other side of the phone said as long as it is within the gap they give you either side of it, it will be fine, I get paid that bit extra for nights so my income goes up a couple of hundred pounds but nothing over the amount they are trying to suggest, my child tax credits have now been reduced to £75 all because they cant work it out properly, they should wipe the slate clean with everyone and start again... useless government!
Mohammed, Birmingham

Every year I have been over paid but it is only by a small amount and I have to pay it back, but because I make sure that the inland revenue is fully aware of my situation as soon as it happens, that is why it doesn't get out of hand. Sorry I am happy with the system
Sally Collier, Essex

The Inland Revenue have over paid me by £6,000, now they have stopped payment altogether. I have appealed but they say it is my fault for not informing them about my change of income. When this change of income occurred I had just become a widow with two young sons and my priority was with them not with form filling. This overpayment situation has been going on for three years and they knew I was being overpaid yet they still kept making payments into my bank account.
Thelma Grasham, Louth, UK

I was overpaid by 1,600 pounds now instead of getting 230 a month I am now getting 40 pounds per month, this is a massive drop and I am really going to struggle with two children one newborn, lets dock the people who screw this up every year lets dock there wages for huge mistakes, not the innocent
Sarah N, Stockton

We were over paid in 2003, I have recently had phone calls from the recovery department wanting it back, they stopped the money we were getting in the same year, so we did not re-aply until February this year as we had another child. I'm the only one working in the house hold and can not afford to pay back the £2,500. My point is that they should have spent more time working on the system, instead of rushing in to it and giving us money that they are now saying we all owe back
Jon Powell, Southampton, UK

I was overpaid over £8,000 in 2 years when I was working, the debt was the inland revenues fault and the money was written off. I have now been informed I have been overpaid another £1,660 and have been told to repay it, I am going to appeal this also. That is around £10,000 over 3 years, the system is a total farse.
G Smillie, Wishaw

The government seems to have made a mess of things as always but then the recipients of tax credits should have checked they were getting the right amount - or did some of them hope they'd get away with conning the rest of us out of our hard-earned cash?
Toby, UK

For two years running I've been overpayed without knowing. The Dept is blaming me for not checking my figures, but I don't know how to work out credits, and not only that my income has not changed over 3 years so how can they still get it so wrong??
Nadine , Stroud

I received a letter saying I've overpaid £3,000 and I said this was not my fault as i had contacted the tax credit office constantly saying my earnings had changed. I am now being forced to pay this back over a 12 month period.
Lisa McIlwaine, Glenrothes

I have just had a letter to tell me i have to pay back £3000.00 . I am sure this isn't my fault. If I have to pay this back it is going to take all my savings. I just dont know what to do. Thanks Sue Bevan
Susan Bevan, Manchester

I'm currently being asked to pay back £550 that I was never paid in the first place: the money was paid to my (ex)-wife, and now the Inland revenue is trying to make me responsible for paying it back. It's outrageous.
Richard Bailey, Edinburgh

Tax credits made a mistake with our payments and over paid us over £5,000. They have now stopped our tax credit payments (£10 per week) and the money that we are now not getting is taken off the total they gave us by mistake. If they are not going to force people to get the money back then how do I go about getting my payments re instated?
Simon Willis, Ringwood, UK