HMRC has confirmed in a report that up to 3.5 million people may have mistakenly overpaid tax during the 2012-13 financial year.
The good news if you are one of these people is that you will get a refund imminently. HMRC has confirmed that those found to have overpaid after filing their self-assessmentwill be refunded an average of between £350 and £500. However, as with many proclamations that come from HMRC, there is a sting in the tail. Some taxpayers have been found to have underpaid. Up to 2 million taxpayers will discover that they have paid too little tax through the PAYE system, and still owe a further £400-£500.
HMRC runs this reconciliation process every year.
It reviews the amount of tax and national insurance deducted by employers and compares this with the information it holds on record. Although the reconciliation started last week, it is expected to continue through to the autumn. So if you haven’t yet heard that you’ve either under or overpaid, don’t count on not hearing later on in the year. If you can’t wait that long, then speak to a qualified accountant who’ll be able to put your mind at rest.
Although a total of up to 5.5 million taxpayers may have either under or overpaid tax in 2012-13, HMRC still believes that the vast majority of people who pay their taxes through the PAYE system have been taxed correctly. However, it argues that it is unable to account for changes to personal circumstances which might have an impact on over or underpayment, such as new jobs, additional income sources and changes to employee benefit entitlements.
According to an HMRC spokesperson:
“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.”
If you are one of taxpayers who are due a refund, then you will receive a ‘payable order’ which should arrive any time from June onwards. If you are one of the taxpayers who have been deemed to have underpaid through PAYE for 2012-13, you will probably not receive a bill for the outstanding amount. Your tax code will be amended instead, and any tax outstanding will be paid back from salary deductions during the 2014-15 tax year. What about cases where there is deemed to be considerable hardship? Well, HMRC has expressed its sympathy and explained that in cases of genuine hardship, tax payers may be able to repay outstanding tax over a period of 2 to 3 years.
If you are confused about your tax affairs, or have any concerns relating to self-assessment or tax underpayments, then give Steven Glicher accountants a ring on 0161 485 8007.