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IOD A DIRECTOR'S POCKET BOOK: CREDIT MANAGEMENT
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Tax credits are worked out on a yearly basis, in line with the tax year (6 April –5 April). Your tax credit award is initially based on your income from the previous tax year. At the end of the year, once all the information about your income and circumstances is available, HMRC will compare your tax credit entitlement with what they have paid you. If HMRC think they have paid you more than you are entitled to, this is called an overpayment, and they will expect you to pay it back - although they may not ask you to pay back all of it....
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