The taxman says three and a half million people are due a refund, but two million will have to fork out for underpaid tax.
£1.2m Navy wages error to be repaid
The MoD said 'procedures are in place to prevent any hardship to individuals'
Hundreds of serving and former members of the Royal Navy face having to make repayments after a £1.2 million wages blunder.
The Ministry of Defence (MoD) said 423 people were affected by the mistake, which could see many having to pay monthly deductions from their wage packets until the money they have been overpaid is recovered.
The Daily Mirror said one of those affected learned that he must give back as much as £17,000 while another was told he had been overpaid by £9.
The newspaper said the news of the overpayment - understood to date back over many years - was broken to sailors in a letter from the MoD after a lengthy investigation into ratings on the wrong pay grade.
The letter said a write-off had been considered but this had been deemed "inappropriate" and all the money owed would be recovered.
In most cases, repayments will be by instalments through deductions from pay. Under MoD rules, those affected will not lose more than four days' pay a month.
A sailor told the Daily Mirror: "There is a lot of confusion and worry that at a time of recession we will have less in our pay packet through no fault of our own.
"Many did not notice the over-pay because they were busy and now they are being faced with more debt, which is especially bad if they are being made redundant."
An MoD spokesman: said: "We can confirm that an overpayment of salary has been made to a number of Navy personnel.
"We have apologised to all of those affected and in accordance with standard Government practice, arrangements are in place for repayment of monies wrongly received. Where repayment of monies is appropriate, procedures are in place to prevent any hardship to individuals."
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