Under and overpayments

When a client has been underpaid Jobseeker Support Student Hardship and is owed arrears, MSD will work out the amount of tax and pass this on to Inland Revenue.

From 1 April 2024, if an arrears payment relates to a previous tax year, the arrears will not be included in the client's end-of-year tax assessment. This means the client will not have to pay any more tax on the payment.

Only arrears payments relating to the current tax year will be included in the client's end-of-year tax assessment.

Example

A client is paid arrears on 12 June 2026. This payment represents arrears for 25 March 2026 to 8 June 2026.

The arrears for 25 March to 31 March 2026 represent a past tax year, so they will not be included in the client's end-of-year tax assessment. The arrears for 1 April to 8 June 2026 represent the current tax year, so they will be included in the client's end-of-year tax assessment.

If a client has been overpaid, the overpayment is always established for the net amount. Inland Revenue will return the tax portion of the overpayment directly to MSD.

The overpayment will reduce the amount of benefit and tax paid in the tax year in which the overpayment was made, that is, the overpayment will directly relate to the tax year(s) in which it occurred.