Six million people in UK have overpaid or underpaid tax Tax

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Six million people in UK have overpaid or underpaid tax


Problems with tax often arise when individuals change jobs or hold more than one job at once


Nearly six million people in the UK have paid the wrong amount of tax.
About £2bn was underpaid via the Pay as You Earn (PAYE) system in the past two years, with about 1.4 million people owing an average of £1,500 each.
But £1.8bn has also been overpaid and some 4.3 million people will get a rebate because they have paid too much.
A new computer system has allowed more discrepancies to be identified, but HM Revenue and Customs said the "vast majority" of tax bills were correct.
The number of people affected by over or underpayments is also higher than usual because HMRC is currently reconciling two years of PAYE contributions at the same time, rather than just one.


Notification letters

The new computer system was introduced by HMRC in 2009 to cope with changing working patterns.








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Paul Lewis, presenter of Money Box on BBC Radio 4: "There is an appeal process"



In the past, when most employees would stay with a single company for life, it was easier for information on required contributions to be kept up-to-date.
But a new era in which individuals hold a succession of jobs and often receive taxable benefits like company cars meant the system had to be overhauled.
Millions of letters will be sent to taxpayers across the UK informing them of errors in their contributions.
The first 45,000 are expected to arrive on Tuesday, with 30,000 informing recipients they are due a rebate of on average £418.
The remaining 15,000 letters will tell taxpayers they have underpaid and will have their tax code altered next year to recoup the money.
It is thought that some individuals may face both underpayments and overpayments, which could cancel each another out.
Discrepancies arise when the amounts deducted in tax and National Insurance by employers using the PAYE system do not match the information held on HMRC records.

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The government accepts that the way we go about deducting tax at source needs to be much more accurate”

End Quote HMRC spokesman

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This most often occurs when individuals change jobs, have more than one job at the same time, or because employers are using the wrong tax code.
In some cases officials say they will consider writing off demands for additional money if taxpayers can demonstrate they provided all the information necessary to calculate their tax correctly.


An HMRC spokesman told the BBC: "The overwhelming majority of PAYE cases - over 40 million - are right, so most people have paid the right amount of tax.
"But for a variety of reasons in some cases there will be a discrepancy.
"The government accepts that the way we go about deducting tax at source needs to be much more accurate and the introduction of the NPS [computer system] paves the way for a real time system which in turn boosts accuracy."
In June, the government ordered a review of how the PAYE system works and is encouraging the public to contribute their thoughts about how it could be improved.



http://www.bbc.co.uk/news/uk-11186397

[FourRings]

Glad i don't have to go anywhere PAYE, the times i have in the past have been a nightmare with emergency tax codes and waiting on rebates.