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Six million people in UK have overpaid or underpaid tax | Six million people in UK have overpaid or underpaid tax |
(40 minutes later) | |
Nearly six million people in the UK are to be told they have paid the wrong amount of tax. | Nearly six million people in the UK are to be told they have paid the wrong amount of tax. |
About £2bn has been underpaid via the Pay as You Earn (PAYE) system in the past two years, with about 1.4 million people owing an average of £1,500 each. | About £2bn has been underpaid via the Pay as You Earn (PAYE) system in the past two years, with about 1.4 million people owing an average of £1,500 each. |
But £1.8bn has also been overpaid and some 4.3 million people will get a rebate because they have paid too much. | But £1.8bn has also been overpaid and some 4.3 million people will get a rebate because they have paid too much. |
HM Revenue and Customs (HMRC) said the "overwhelming majority" of PAYE contributions were correct. | HM Revenue and Customs (HMRC) said the "overwhelming majority" of PAYE contributions were correct. |
Millions of letters will be sent to taxpayers across the UK informing them of errors in their contributions. | Millions of letters will be sent to taxpayers across the UK informing them of errors in their contributions. |
The first 45,000 are expected to arrive on Tuesday, with 30,000 informing recipients they are due a rebate of on average £418. | The first 45,000 are expected to arrive on Tuesday, with 30,000 informing recipients they are due a rebate of on average £418. |
The remaining 15,000 letters will tell taxpayers they have underpaid and will have their tax code altered next year to recoup the money. | The remaining 15,000 letters will tell taxpayers they have underpaid and will have their tax code altered next year to recoup the money. |
It is thought that some individuals may face both underpayments and overpayments, which could cancel each another out. | It is thought that some individuals may face both underpayments and overpayments, which could cancel each another out. |
Computerised | Computerised |
Discrepancies arise when the amounts deducted in tax and National Insurance by employers using the PAYE system do not match the information held on HMRC records. | Discrepancies arise when the amounts deducted in tax and National Insurance by employers using the PAYE system do not match the information held on HMRC records. |
This most often occurs when individuals change jobs, have more than one job at the same time, or because employers are using the wrong tax code. | This most often occurs when individuals change jobs, have more than one job at the same time, or because employers are using the wrong tax code. |
In June 2009, the process of checking contributions was computerised, which HMRC says should help reduce errors in the future. | In June 2009, the process of checking contributions was computerised, which HMRC says should help reduce errors in the future. |
But in some cases officials say they will consider writing off demands for additional money if taxpayers can demonstrate they provided all the information necessary to calculate their tax correctly. | But in some cases officials say they will consider writing off demands for additional money if taxpayers can demonstrate they provided all the information necessary to calculate their tax correctly. |
An HMRC spokesman told the BBC: "The overwhelming majority of PAYE cases - over 40 million - are right, so most people have paid the right amount of tax. | An HMRC spokesman told the BBC: "The overwhelming majority of PAYE cases - over 40 million - are right, so most people have paid the right amount of tax. |
"But for a variety of reasons in some cases there will be a discrepancy. | "But for a variety of reasons in some cases there will be a discrepancy. |
"The government accepts that the way we go about deducting tax at source needs to be much more accurate and the introduction of the NPS [computer system] paves the way for a real time system which in turn boosts accuracy." | |
In June, the government ordered a review of how the PAYE system works and is encouraging the public to contribute their thoughts about how it could be improved. | In June, the government ordered a review of how the PAYE system works and is encouraging the public to contribute their thoughts about how it could be improved. |