Tax & Accounting News

Incorrect Tax Codes Affect Millions Of Employees

04/08/2009

HM Revenue and Customs (HMRC) has reported a rise in the number of queries it has received concerning incorrect employee tax codes, with 20million code queries reported this March, compared to 16million the previous year.

The National Audit Office (NAO) has calculated that as many as 4.5million employees may have had too much tax taken from their pay as a consequence of being allocated the wrong code, and that HMRC may have to refund as much as £1.6billion, while another 1.5million workers may have paid too little tax, owing around £400million.

HMRC put the problem down to an increasing number of coding discrepancies caused by changing work patterns, but estimated 77% of the cases it was dealing with would be tax neutral.

It added that anyone whose tax code was incorrect would be informed and their code altered to affect the amount of tax they had over- or underpaid.