Taxman takes wrong tax from sixth of taxpayers
Over 5m taxpayers paid the wrong amount of tax last year, HMRC says, with the reconciliation underway two months early
APPROXIMATELY 3.5m people are due to be notified they have paid too much tax due further calculations by the taxman, which will see them receive an average of £379.
A further 1.6m people will receive letters saying they have underpaid their taxes next week, with £537 due to be picked up by HM Revenue & Customs.
This will be collected primarily by adjusting employees’ tax codes to compensate, seeing them take home less every month.
The number of people receiving reconciliation letters is slightly up on last year, in spite of steps taken to reduce unexpected tax demands on people in the coming years. However, the taxman has begun the process two months earlier than last year.
HMRC said changes to benefits in kind provided by employers, moving jobs frequently with gaps between periods of work and customers having more than one job or pension with tax-free allowances spread between them were the main causes of the disparities.
Robert Oxley, the campaign manager for the TaxPayers’ Alliance, told The Telegraph that the taxman was “giving with one hand and taking with the other because of an overly complex and burdensome tax system that can’t keep up with peoples’ changing circumstances”.
“We urgently need a simpler, fairer system that leaves everyone with more cash in their own pockets to spend as they choose,” he added.
Stephen Banyard, HMRC’s acting director general for personal tax, said: “We are improving the PAYE system further through the introduction of Real-Time Information (RTI), which will make it easier for employers and pension providers to administer as they will tell HMRC about PAYE payments at the time they are made – as opposed to only at the end of the year – reducing the need for corrective actions at a later stage.
“We are pleased that we are able to start this process more quickly than in previous years, giving money back to those we owe and delivering certainty to those with something to pay,” he added.
The entire process of refunds and reclaims should be complete by October this year, HMRC said, adding there is no need for customers to contact them.