HMRC’s annual automatic review, or ‘reconciliation process’, which calculates whether individuals have paid the correct amount of tax through its Pay As You Earn (PAYE) service is now underway, nearly two months earlier than usual; leaving millions in anticipation for a tax rebate, or a nasty surprise for those who may owe the tax man.
HMRC estimates that around 3.5 million taxpayers may have over-paid tax and could potentially be in-line to receive an average rebate of £379. Alternatively, around 1.6 million individuals may have underpaid tax and will owe an average of £537 to the tax man.
These errors may have occurred if your circumstances have changed during the past tax year; if you have changed employment, had gaps of unemployment or multiple jobs or pensions which affect your tax free allowance, and if you have received benefits in kind through your employer which may have changed.
Those who have paid too much or too little tax will be contacted by HMRC via post from May through to October 2012. Automatic repayment will be made to those who have overpaid, while HMRC will usually automatically recover any underpayments through the PAYE system in instalments over the coming year.