Around 3.5 million taxpayers are due to be informed by HMRC that they have paid too much tax which will result in an average refund of £379 each.
HMRC will also send out about 1.6 million letters next week to people advising that they have underpaid tax by, on average, £537. These underpayments will be collected by way of a reduction in individuals PAYE code numbers thereby increasing the amount an employee pays in tax each month.
Despite criticism of the department following least years PAYE fiasco and putting into place measures to reduce landing unexpected tax bills on people in the future, the number of people receiving letters from HMRC has marginally increased from 2011. The Revenue has explained however that this is due to changes in benefits-in-kind provided by employers, individuals having multiple jobs, changing jobs or receiving a pension in addition to employment income and splitting their personal allowance between the different sources of income.
The process of issuing tax underpayment/overpayment letters has, however, begun two months earlier than last year which should enable the whole process of clawing back and refunding tax by October.
HMRC claim that they are improving the PAYE system by the introduction of Real Time Information (RTI) which will enable employers and pension providers to report PAYE payments as and when they occur.
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