Tax credits underpayments
The tax credits system closed on 5 April 2025, so no tax credit awards will continue after that date. Most people will have been invited to claim either universal credit or pension credit. However, HMRC may make changes to 2024/25 and earlier tax credit awards after 5 April 2025 which may mean you were paid too little and are owed some money by HMRC – this is called an underpayment.
Overview
Usually the amount of tax credits you are actually entitled to for a tax year is not decided until the award ends and HMRC review your actual household income and circumstances for the period of the award (usually a tax year). HMRC will then make their final decision about entitlement for the tax year just ended. At that point, HMRC compare what they have paid to you with what you were entitled to and if they have paid more than the entitlement, you will have an overpayment. If they have paid less than the entitlement, you will have an underpayment.
There are no tax credit awards after 5 April 2025. However, you may have an underpayment after confirming your 2024/25 income to HMRC as part of the finalisation process or HMRC may change your 2024/25 award (or awards for earlier years) after it has been finalised. For example, this might happen where:
- You have appealed a decision and your appeal is successful
- You tell HMRC about a decision on a qualifying disability benefit claim within one month of the decision – HMRC may check your earlier tax credit awards to see if you are entitled to a higher award
- HMRC check your claim for an earlier year – called a compliance check – and find you were not paid enough for some reason
How underpayments are paid
Most underpayments will be paid as a lump sum directly to you. However, HMRC say that if you have any overpayment of tax credits outstanding, they may set any underpayment against the overpayment.
If you are in in receipt of other benefits, we recommend getting advice about reporting income changes for tax credits
