Two million face underpaid tax bill

Millions have paid too little tax following PAYE scheme blunders

Millions have paid too little tax following PAYE scheme blunders

First published in National News © by

The taxman is to claw money back from an estimated two million workers who have paid too little tax during the last financial year.

HMRC said it has started writing to around 5.5 million taxpayers to tell them they have either made underpayments or overpayments through the pay as you earn system (PAYE) in 2013-14.

Officials expect the size of the typical rebate or shortfall to be £350 per person. Those who have underpaid can make up what they owe through PAYE during the coming year, while around 3.5 million people who are thought to be owed money do not need to actively claim for a rebate as they will receive a letter and an automatic refund.

The exact number of people thought to have paid the wrong amount of tax in 2013-14 is still being firmed up, although the estimated number of 5.5 million is higher than the previous year's total of 5.2 million. However, the typical size of the anomaly is about £50 less than in 2012-13.

The uplift in the number of people who have made an under or overpayment comes despite the introduction of a £270 million scheme designed to make the tax system more precise.

The revenue body's new "real time information" (RTI) programme allows employers to report wage changes on a weekly or monthly basis, theoretically making tax payments more accurate.

A spokesman for HMRC said that the increase in the number of people who have paid the wrong amount of tax could partly be explained by increased numbers of people finding work as the economy recovers, with some people taking on second jobs.

He said that HMRC is not always being informed straight away about changes to workers' circumstances, which also makes it harder for exactly the right amount of tax to be collected within a given tax year.

The spokesman added that under and overpayments are a "normal part" of how the PAYE process has worked over the 70 years it has been in existence.

The revenue body said that the full impact of the new RTI system is not yet being seen, as its staggered roll-out meant some employers had not used the system for the full tax year.

As the system beds in, the number of inaccuracies should start to drift downwards in the longer term.

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