A group is urging taxpayers to double-check they’re not being stung through the PAYE system
The group is urging taxpayers to double-check they’re not being stung through the PAYE system(Image: Nico De Pasquale Photography via Getty Images)
Tax officials overcharged workers £3.5billion in income tax last year, leaving 5.6 million Brits out of pocket, new figures reveal. National accountancy group UHY Hacker Young has issued a stark warning that HMRC is “under no obligation” to scrutinise people’s accounts and tax returns to flag up when they’ve been overcharged.
The group is urging taxpayers to double-check they’re not being stung through the PAYE system. When you’ve payed too much or too little tax by the end of the tax year (5 April), HMRC should send you either a tax calculation letter (P800) OR a Simple Assessment letter.
This tells you how to claim back what you’re owed or settle any outstanding dues. UHY Hacker Young believes this overcharging through PAYE is mainly down to HMRC issuing incorrect tax codes, reports Birmingham Live.
Neela Chauhan, Partner at UHY Hacker Young, said: “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.”
She adds: “HMRC won’t always correct overcharging mistakes automatically. 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. Particularly those with any form of non-PAYE income or company benefits.”
Tax codes are a mix of numbers and letters assigned by HMRC that dictate the amount of income tax workers pay out through the Pay As You Earn (PAYE) system. The most common tax code for the current tax year across the UK is 1257L, reflecting the standard personal allowance of £12,570, which marks the limit for tax-free earnings, as confirmed by the latest HMRC documentation.
HMRC refreshes its records due to shifts in benefits or tax-deductible expenses. When an update takes place, HMRC will alert the taxpayer via a P2 notice, formally dubbed a ‘Notice of Coding’. Employers and pension providers also receive updated notifications electronically to implement the new code through payroll systems.
