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1. Background

These statistics provide a breakdown of payments made for tax credit claims based on finalised data. This is a supplementary publication following the Finalised Annual Awards publications released in July 2024 for tax year 2022 to 2023, following award finalisation.

The rate of decline in the number of families receiving tax credits increased in 2022 to 2023, largely due to the roll out of Universal Credit.

Generally, the decreases observed between 2022 to 2023 were observed in our finalised annual awards publication found below:

Child and Working Tax Credits statistics, finalised annual awards - 2022 to 2023

Finalisation occurs four to nine months after the end of the tax year when the families鈥� circumstances for the whole year are known and a finalised award can be calculated. Tax credits recipient families that delay reporting changes in household circumstances can result in either an overpayment or underpayment in their claim.

2. Main headlines

Figure 1: Number of awards by payment type and year

Figure 1 shows the number of tax credits claims that were overpaid, underpaid or paid correctly since 2020-21.

The total number of tax credits continues to decrease, as has the number of underpaid, overpaid and correctly paid awards.

Between 6 April 2022 and 5 April 2023:

• 52% (747k) of tax credits were paid correctly, remaining relatively stable compared to last year

• 35% (509k) of tax credits were overpaid, remaining relatively stable compared to last year

• 13% (181k) of tax credits were underpaid, remaining relatively stable compared to last year

• the average amount overpaid this year was 拢1,041, and the average amount underpaid this year was 拢836

3. Underpaid awards by band of payment

Figure 2: Underpaid awards by band of underpayment

Figure 2 shows the number of tax credits claims that were underpaid, split by band of underpayment, for both this year and last year鈥檚 finalised awards.

Underpayments can range from below 拢50 to over 拢2,000. Between 6 April 2022 and 5 April 2023:

• the highest number of underpayments were in the 拢200 to 拢500 group, the same as last year

• the more than 拢2,000 payment group saw the smallest decrease in number of underpaid awards, of 12%

• the 拢10 to 拢50 payment group saw the largest decrease in number of underpaid awards, of 47%

4. Overpaid awards by band of payment

Figure 3: Overpaid awards by band of overpayment

Figure 3 shows the number of tax credits that were overpaid, split by band of overpayment, for both this year and last year鈥檚 finalised awards.

Overpayments can range from below 拢50 to over 拢2,000. Between 6 April 2022 and 5 April 2023:

• the highest number of overpayments were in the 拢200 to 拢500 group, the same as last year

• the 拢10 to 拢50 payment group saw the smallest decrease in number of overpaid awards, of 6%

• on the other hand, the 拢50 to 拢100 and 拢100 to 拢200 payment groups saw the largest decrease in number of overpaid awards, of 22% each

5. Underpaid and overpaid awards by band of family income

Figure 4: Underpaid and overpaid awards by band of family income

Figure 4 shows the number of tax credits payments that were overpaid or underpaid based on the family鈥檚 band of income. Between 6 April 2022 and 5 April 2023:

• the income band group with the highest total number of underpaid and overpaid awards was the 拢20,000 to 拢30,000 group

• with the exception of the 拢5,000 to 拢10,000 income band group, there were more overpaid awards than underpaid awards

• claimants with an income 拢30,000 to 拢40,000 were 5.77 times more likely to have an overpayment than an underpayment

• those with incomes between 拢5,000 to 拢10,000 had the lowest relative number of overpayments to underpayments (1 overpayment for every underpayment)

6. Overpaid or underpaid awards by employment status and type of tax credit received

Figure 5: Overpaid or underpaid awards by employment status and type of tax credit received

Figure 5 shows the number of tax credits payments that were overpaid or underpaid based on the family鈥檚 employment status and type of tax credits received. Between 6 April 2022 and 5 April 2023:

• the highest number of overpaid awards and underpaid awards were for those in work, receiving both WTC and CTC

• with the exception of the 鈥榠n work with no children, receiving WTC only鈥� profile group, all groups received more overpaid awards than underpaid awards

• the 鈥榠n work, receiving CTC only鈥� profile group had the largest relative number of overpayments to underpayments (2.4 overpayments for every underpayment)

• the 鈥榠n work with no children, receiving WTC only鈥� profile group had the lowest relative number of overpayments to underpayments (1 underpayment for every overpayment)