Millions of British workers have been urged to take immediate action after it was revealed that HM Revenue and Customs (HMRC) overcharged taxpayers a staggering £3.5 billion in income tax last year.
Millions Out of Pocket Due to PAYE Errors
New figures show that 5.6 million Brits were left out of pocket in the last financial year due to errors in the Pay As You Earn (PAYE) system. The national accountancy group UHY Hacker Young has issued a stark warning, stating that HMRC is "under no obligation" to proactively scrutinise individual accounts to identify and correct these overcharges.
This means the responsibility falls squarely on the taxpayer to spot mistakes and claim back any money owed. Neela Chauhan, a Partner at UHY Hacker Young, explained: "Millions of people are paying the wrong amount of tax simply because HMRC is almost guessing what they earn. For too many people, this will go completely unnoticed."
Why Overpayments Happen and How to Spot Them
The primary cause of these widespread overpayments is believed to be incorrect tax codes issued by HMRC. Your tax code, a combination of numbers and letters like the common 1257L, dictates how much tax is deducted from your pay or pension. It is based on your tax-free personal allowance, which is currently £12,570.
Errors frequently occur when an individual's circumstances change, such as:
- Starting a new job or having multiple incomes.
- Receiving company benefits like a car or health insurance.
- Changes to tax-deductible expenses.
HMRC should send you a P800 tax calculation or a Simple Assessment letter after the end of the tax year on 5 April if you have overpaid or underpaid. However, the firm stresses that "HMRC won't always correct overcharging mistakes automatically."
The Onus is on You to Claim Your Money Back
Chauhan emphasises the critical need for personal vigilance: "If you don't check your tax code or your PAYE calculation, you may never get your money back. The onus is on taxpayers to spot HMRC's errors. People must check their tax codes and year-end PAYE summaries for mistakes."
This warning is particularly pertinent for anyone with non-PAYE income or those receiving company benefits. When HMRC does update its records, it sends a P2 'Notice of Coding' to the taxpayer, with electronic notifications sent to employers and pension providers.
To protect yourself from being overcharged, you should regularly review your tax code on your payslip, your P60, and any correspondence from HMRC. If you suspect an error, you can contact HMRC directly to query your code and initiate a claim for any refund due.
