Wrong Tax Codes Could Cost Thousands

Countless employees could see their tax payments rocket over the next year as the introduction of a new computer system has left many with the wrong tax code, one group has warned.

The Chartered Institute of Taxation has claimed that “huge numbers of people” may pay up to £1,300 in extra tax due to the HM Revenue & Customs’ (HMRC) technological error, which has seen some employees given two or more tax coding notices with varying tax codes.

More worryingly, if the HMRC fails to solve its problems before the start of the new tax year in April, incorrect tax codes could be associated with thousands of employees, meaning pension companies and employers would deduct too much tax from Pay As You Earn schemes (PAYE).

"Most people on PAYE are used to assuming that what the taxman sends them is correct. Many file away coding notices without even bothering to check them,” claimed Andrew Hubbard, President of the Chartered Institute of Taxation.

"But this year, many of them are being given wrong information and unless they spot it and tell HMRC, their employer will receive the wrong information too and they could get a nasty shock when they open their April pay packet and see it is as much as a hundred pounds lighter than they are expecting.”

The Institute has urged the government to launch a publicity campaign highlighting the substantial errors that have emanated from the HMRC’s system failures. Employees have also been told to seek advice and regularly check their tax code is in line with their wages.