Millions of people, including umbrella contractors, could be in line for an early Christmas present from HMRC in the form of a tax rebate. 6 million income tax rebates will be made following the identification of PAYE errors in the years up to 2007/08.
Taxpayers will begin receiving letters from the Revenue shortly informing them whether they are due a rebate, or in the case of 1.2 million individuals, how much tax they underpaid in the last tax year. Anyone owing money to HMRC will be offered the opportunity of agreeing a payment plan.
HMRC claim these figures as a partial success and they are definitely a huge improvement on those of last year when 15 million people were found to have paid the incorrect amount of income tax.
It has been estimated that UK taxpayers have overpaid £2.5 billion and HMRC has said that money will be repaid with interest. A Revenue spokesman said there are always some under or overpayment cases at the end of a tax year but once the new system is up and running properly, the number should reduce.
The 6 million identified cases will receive rebates of around £400, whilst the 1.2 million who have underpaid will be receiving a bill for an average £600. Of those who underpaid, 146,000 are believed to be pensioners.
Every year HMRC identifies a ridiculous amount of errors in the PAYE system. It now wants to move to real-time PAYE information, saying this will cut down on future errors. However a vast amount of people think the October 2013 deadline for implementation is unrealistic when you consider the scale of the exercise.
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Image: Present for Tony by andymangold
