More than 5 million taxpayers have bene caught by tax miscalculations.
It ‘s been estimated that 5.5 million or more people may have paid the wrong amount of tax; some have paid too much meaning their due a tax rebate, but a significant number may have to make further payments to HMRC to correct the error, according to details released by the government organisation.
Around 3.5 million, it appears, paid too little income tax in the tax year 2013/14 through PAYE; the underpayment will be taken through the system over the next few years. These problems persist despite the introduction of the new RTI system (real-time PAYE). Approximately 2 million people were charged too much and can claim it back from HMRC.
The 5.5 million errors for the tax year 2013/14 are higher than the errors for 2012/13 which numbered 5.2 million.
The RTI system aims to reduce the number of reconciliations but the staggered nature of introducing the system means that it has had only a limited impact so far. The HMRC has also stated that the money value of underpayments and overpayments fell by £50 in comparison to the previous year.
An HMRC spokesperson commented: “There will always be end-of-year reconciliation due to the way PAYE works. Most people pay the right tax throughout the year, but there will always be a small percentage of the 41 million people in PAYE who have underpayments or overpayments at year end. This could be because they have moved jobs, received a number of different sources of income or received benefits-in-kind that were only reported at the end of the year.
“The effect of RTI is not reflected yet as it has not bedded in but, over time, RTI will help to reduce the number of cases that have to be reconciled. The estimates quoted for reconciliations in 2013/14 are based upon actual reconciliation numbers in 2012/13. We do not yet know what effect RTI will have had on reconciliations for 2013/14. As we adopted a staged process for employers using RTI, some will not have used RTI for the full tax year. We will not be able to measure any effect on reconciliations for 2013/14 until the end of this tax year (2014/15).That said, early indications show that processing is in line with our expectations.”
