Millions to get tax rebates after HMRC blunder

Tax on calculator

Around six million people are in line for tax rebates after the HM Revenue & Customs (HMRC) made a computer error.

A further one million will be less lucky as they will receive letters saying they have underpaid and owe money to the taxman.

Years of errors

Earlier this year, HMRC informed almost five million taxpayers that they had either paid too much - or too little - tax during 2010-2011.

Repayments have already been made for tax errors during this period, but now it turns out that the HMRC has made errors for 2007-2008 and even earlier.

HMRC will now be contacting people who have overpaid during this period. These payments, which will include interest, will average around £300.

In addition, the HMRC will begin collecting money from those who have underpaid during this period, with the average bill standing at £400.

This year's key tax changes

The bad news...

Around £146,000 pensioners will also be receiving letters after mistakes in the taxing of the state pension during 2010-2011 meant they underpaid tax for this year. They will automatically be given three years to pay back any tax owed and the amount is expected to be around £100 to £200.

Patrick O'Brian, spokesperson for HMRC, says: "It's impossible to say how many people exactly have overpaid but there are six million cases in which rebates are due and each person should receive on average a couple of hundred."

If you owe HMRC tax the money will be taken through your employer's PAYE system, and if you're a pensioner it will be deducted from your state pension. There is now an option of spreading out the payment over a longer period of time, but to do this you must first contact HMRC.

HMRC will start sending out letters in the next few months to people affected and the whole process is due to be cleared by December 2012.


More about

Your Comments

Around £146,000 pensioners

I complete a self assessment form on line so I can always see what my tax situation is. Earlier this year I had a demand from the Inland Revenue for underpaid tax from an earlier tax year which they say I had not paid, however looking at my previous tax correspondence I had clearly repaid this underpaid tax through my coding so called them up and got my tax code changed. They then wrote to me again to say I still owed money from 2001/2002 which again I proved I didn't owe and which I had again repaid through my coding. I'd advise everyone to keep all their tax records for current and previous years so that in the event this happens you have the documentation to check the validity of any tax demands!! In a conversation with my tax office I asked what had gone wrong, I was told that it was as simple as an "unticked box" and that had generated the demand in my case.

I think pensioners have enough to worry about this winter, so why doesnt the Government do the right thing for once and waive this amount - surely this amount could be had from the booze bill that MP's drink daily.....

So HMRC makes yet ANOTHER blunder and it seems, as usual, those least able to recompense those with their snouts in the trough are in line to pay for their mistakes. Don’t these imbeciles realise how far a state pension goes? Especially the other snouts in the trough, namely the power companies. Why don’t they write it off as an error and let the poor and needy exist (for an existence is all one can manage on a pension) instead of making the old folk switch off their heating and spend all day in bed just to keep warm. What kind of society does this to our pensioners whilst the fat cats guzzle their champers and keep their mansions at sub tropical temperatures? A National disgrace say I, anybody disagree?

I always complete a tax return even if HMRC tell me I don't need to. A couple of years ago I had some foreign income which meant I could not file on-line. I duly completed the paper form, but under the threat of a fine if I got the calculation wrong, left HMRC to do the calculation. A few weeks later I got a notification of underpaid tax due, but on checking their calculation I found they had completely ignored two boxes where I had claimed relief. I replied showing my calculation and subsequently received a rebate for overpaid tax - but no apology for their initial mistake.