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Easier ways to pay back overpayments

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The Government wants to prevent or reduce debt being incurred from overpayments to Working for Families customers.   Basing Working for Families payments on recent actual income instead of an estimate would reduce the likelihood of overpayments due to income changes.  This is because payments based on actual income would be more accurate.

Overpayments would still occur sometimes, for example, when a customer doesn’t tell Inland Revenue quickly enough about a change in their family circumstances, such as a child leaving their care.  

A proposal in the discussion document is for Inland Revenue to

  • act more quickly if there is an overpayment
  • allow a customer to choose to have an overpayment deducted from future payments
  • not charge penalties or interest when the customer is actively trying to repay the overpayment.

If a customer does not comply, or there was fraud involved, Inland Revenue would still be able to charge interest and penalties if they don’t repay by the due date.

Move more quickly to help customers with overpayments

Currently, Working for Families overpayments must be repaid by 7 February. This can be at least 10 months after the overpayment happened, and is at a time of the year when there is often pressure to pay other bills. Penalties and interest apply to late payments. 

The Government is proposing that Inland Revenue intervenes earlier and uses a range of tools when there has been an overpayment. 

Allowing customers to manage their own repayments

Overpayments would be identified and need to be repaid early, rather than waiting for 7 February.

The discussion document proposes that customers should be able to select a preferred repayment method and choose to repay any overpayment in full or in instalments. 

Customers could choose to have overpayments deducted from future payments or, if this was not suitable, deductions could be made from salary or bank accounts. The objective would be to ensure that repayments were regular and manageable for the family.

No penalties or interest would apply when a customer was managing his or her own repayments.  

Inland Revenue would step in to choose a repayment method for any customers who did not self-manage the repayment and could charge penalties or interest if the customer was not complying. 


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