Does the taxman owe you money?
Millions of people will soon be contacted and informed that they either owe or are owed money by the taxman. Are you one of them?
Image - Elizabeth Simpson - Getty Images
Up to 4.7 million taxpayers will be sent letters later this year by the taxman, telling them they have paid either too much or too little income tax during 2010/11.
This latest blunder means that HM Revenue & Customs (HMRC) will send out letters to people who paid too little tax between April 2010 and April 2011, asking for a total of £720 million.
Every year HMRC reviews whether people have paid the correct amount of tax via the PAYE system.
This year the review exercise for 2010/11 will take place in late July, and HMRC estimates that between 1.7 and 3.5 million people will be repaid an average of £340 each. A further 1.2 million will owe between £500 and £600 each.
People who have paid too much tax will be sent a cheque in the coming months and calculations for underpayments will be sent in batches after that, with the last going out in December.
If you are presented with a bill you will have time to appeal against the calculation if you think it is wrong. And if you have underpaid, you may be able to request to have the money taken from your earnings each month via a change to your PAYE tax code for 2012/13.
Up to £3,000 per individual will be collected this time via a restriction to your tax code - more than the previous limit of £2,000.
Not the first error
This is by no means the first error we've seen from HMRC.
Last September, the tax collectors came in for severe criticism when it emerged that 5.7 million people had not paid the correct tax via PAYE for the 2008/09 and 2009/10 tax years.
This meant approximately 1.4 million were forced to pay an extra £1,428 each on average, while around 900,000 taxpayers had debts of up to £300 written off.
The explanation given by HMRC was that a new, more effective, computer system had revealed previous calculation errors.
Please note that articles on MSN Money do not constitute regulated financial advice, which recommends a course of action based upon the specifics of your personal circumstances. The articles are intended to provide general personal financial information. We urge you to consult an Independent Financial Adviser (IFA) before making any important decisions about your finances. You can search for an IFA in your local area. Any statement regarding financial services products and tax liability is based on legislation and tax practices as at 6 April 2011, which is, of course, subject to change. The value of any tax benefits or reliefs depends upon the individual circumstances of the investor. When investment performance is mentioned you should remember that past performance is no guarantee of future performance. Where products have an underlying investment content, in many cases the value of the investment can fall as well as rise. For with-profit based investments, there is no guarantee as to the level of bonuses that will be declared, if any. Where mortgages or secured loans are explained do remember that your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it. All mortgages are subject to underwriting, status and are not available to people under the age of 18.
When did you last switch your current account?
Thanks for being one of the first people to vote. Results will be available soon. Check for results
- In the last six months
- In the last year
- In the last two years
- In the last three years
- In the last five years
- 74 %I have never switched current accounts