A new computer system has found that 6 million people have paid the wrong amount on their taxes and 4.3 million have actually overpaid and will be due rebates. The errors were found due to a newly implemented computer system that checked employer’s payments in HM Revenue and Customs (HMRC) pay as you earn system (PAYE). Those employees who changed jobs were the most likely to have tax payment errors.
Of those underpaying taxes 1.4 million owe an average of 1,400 pounds. This could amount to a difference of over 100 pounds less per month each year as the correction is made with higher deductions from pay to correct the underpayment. The HMRC will consider writing off the difference underpaid if the person can prove they provided the correct information in good faith to correctly calculate their tax.
There are 4.3 million people that will be due rebates because of tax overpayment. The total amount of overpayments amounted to 1.8 billion pounds. This averages out to 418 pounds per person.
The HMRC is mailing out letters to those involved in the tax error. The first are expected to arrive by post on Tuesday. The first batch of letters covers only 45,000 of the estimated 6 million involved in having tax errors so the letters will be coming in intervals over the next few months.
Prior to June the calculations were checked manually between information on the PAYE system and amounts deducted by employers for tax and national insurance. The computer system implemented in June found the errors. The system should ensure fewer mistakes are made in the future concerning tax payments.
A HMRC spokesman said: “The vast majority of the 40 million people who pay through PAYE deductions are correctly taxed, but because circumstances change during the year there will always be a minority who have paid either too much or too little.”
Those who receive letters are encouraged to check the HMRC’s new calculations matches information on the P60 for that same year. If you believe there is an error, you can dispute the extra tax, especially if the HMRC made the error through manually calculating the tax. In some cases the bill of tax due will be dropped. Phone lines are expected to be especially busy at the HMRC offices so you may consider writing if you find it difficult to get through by phone.