Millions to get tax rebates after HMRC blunder

19 October 2011

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.


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