The taxman says three and a half million people are due a refund, but two million will have to fork out for underpaid tax.
City jobs boost may be Games effect
The number of people claiming jobseeker's allowance in July fell by nearly 6,000 compared to June
Unemployment has fallen to its lowest level for a year after a big jump in the number of people in work, especially in London, suggesting a jobs boost because of the Olympic Games.
The jobless total fell by 46,000 in the quarter to June to 2.56 million, a trend seen for the past few months.
The number claiming jobseeker's allowance last month was 1.59 million, down by 5,900 on June, while almost 30 million people were in work, up by 201,000.
Most of the quarterly fall in unemployment was recorded in the capital which has just hosted the Olympics and is gearing up for the Paralympics in two weeks' time.
The Government welcomed the news, saying private firms are creating jobs despite difficult economic times. Analysts said the figures are "almost impossible" to explain, while union leaders warned that dole queues could start rising again.
Other data shows that the number of part-time workers reached a record high of 8.07 million. The number working part-time because they cannot find a full-time job is 1.42 million, the highest since records began in 1992. Youth unemployment fell by 4,000 to just over a million.
Work and Pensions Secretary Iain Duncan Smith said: "These are positive and encouraging figures demonstrating the strength of our private sector, notwithstanding the difficult economic times, it is still creating jobs, the vast majority of which are full-time."
Labour spokesman Liam Byrne said: "Ninety percent of the fall in unemployment was in London, long-term youth unemployment is still going through the roof and part-time work has hit an all-time high as people struggle to find a full-time job. Crucially, there are now huge warning signs on the road ahead."
Dave Prentis, general secretary of Unison, said: "This small fall is welcome but there will be no lasting Olympics legacy in the jobs market. The end of thousands of temporary jobs will see unemployment climbing after the summer."
Graeme Leach, chief economist at the Institute of Directors, said: "The only certainty in the latest labour market figures is uncertainty."
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