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Up to 3.5 million people overpaid in tax in 2012-13

A new report from HM Revenue & Customs (HMRC) has found that up to 3.5 million taxpayers unwittingly paid too much tax during the 2012-13 tax period.
Those found to have overpaid after filing their self-assessment tax returns will be refunded an average of £350-£500, according to HMRC.
However, the news is not all good for taxpayers, with two million others expected to be informed they have paid too little tax, owing a further £400-£500 on average through PAYE.
Each year, HMRC reviews the amount of tax and national insurance deducted by employers, ensuring it matches the information on its records. This end-of-year "reconciliation process" began this week and is likely to continue through to the autumn.
Although up to 5.5 million taxpayers have paid too much or too little in 2012-13, HMRC argues the vast majority who pay through PAYE are correctly taxed, but it is unable to account for changes in personal circumstances, such as new jobs, additional sources of income and amendments to employee benefits.
An HMRC spokesman said: "Around 85% of pay as you earn taxpayers pay the right tax throughout the year ... This is the normal process that the PAYE system has used for 70 years."
Taxpayers who have paid too much tax will receive a “payable order” which should start arriving from June onwards.
The majority of taxpayers who have inadvertently underpaid through PAYE for 2012-13 are unlikely to get a bill – instead their tax code will be amended, with the amount owed paid back via deductions from salary during the 2014-15 tax year.
Note: HMRC has reiterated it is sympathetic to cases of genuine hardship. Taxpayers unable to pay what they owe may be able to repay their fees over the next two or three years.

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