Millions of workers affected by incorrect tax codes

Millions of workers in the UK are expected to be reimbursed after they were issued with an incorrect tax code.

The National Audit Office has calculated that about 4.5 million employees may have unwittingly had too much tax deducted from their wages. As a result, HM Revenue and Customs (HMRC) may be forced to recompense those affected to the tune of 1.6 billion.

A further 1.5 million taxpayers are thought to have underpaid tax by an estimated £400m.

The Revenue claims that the problems were ‘generated by an increasing number of coding discrepancies caused by changing customer work patterns.’

Latest figures from HMRC reveal that there were 20 million queries about tax codes in March this year – up from 16 million a year ago. However, it anticipates that 77% of the ‘open cases’ it is currently dealing with will be tax neutral.

It added that those affected would be notified that their tax code was changing to reflect the amount of tax they had overpaid or underpaid.