Tax errors affect 2 million

Tax errors increased in 2013-14 despite the introduction of a new system requiring employers to provide HMRC with more information about employees.

During the year, 3.5 million people paid too much tax and 2 million paid too little, the average underpayment being £300. Changes in tax codings will enable HMRC to collect underpayments ‘on the drip’, while those who overpaid will be sent a cheque.

The PAYE system inevitably results in a lot of over- and under-payments. The new system is meant to reduce them, and if it doesn’t seem to be doing so when next year’s figures are in, employers will be complaining loudly, because the new system costs them time and money.