Income tax recalculations to hit thousands of people

Posted on January 14th, 2011 | Categories - News

Income tax recalculations have meant that thousands of Britons will have to make extra repayments to the Inland Revenue.

Pensioners hit by the income tax code changes will not have to pay back any outstanding sums.

Thousands of UK workers may have to make extra income tax payments to HMRC due to a tax code recalculation.

A total of £180 million needs to be paid back by 450,000 people who had the wrong tax code between 2007-08. However, 250,000 state pensioners who underpaid during between 2008-09 will not have to pay back a penny.

Exchequer Secretary to the Treasury David Gauke said: “By the end of last year in 90% of cases where HMRC had received all relevant information, customers had received a refund notice or a calculation of overpayment in respect of these years”.

He added: “In the minority of cases where the unexpected bill has been caused by HMRC’s failure to act promptly on the information received, HMRC have considered claims to be written off under an existing concession. Further underpayment notices will not be issued for years earlier than 2007-08”.

The extra payments will be gradually collected through the PAYE system during the 2011 tax year. However, people suffering through financial hardship can apply to have the repayments spread across a slightly longer payment term. Sums of £300 and under will be written off.

In addition, payments will not be demanded from people who underpaid before 2007 but those who were overcharged during the same period will still receive a refund.

Pensioners who overpaid in 2007-08 will not be asked to pay back any outstanding amount either.

Mr Gauke said:“These pensioners have not yet been issued with a notice of underpayment but would have a strong case for their underpayment to be written off in line with the [extra statutory] concession. HMRC will not require these pensioners to claim the concession individually, but will instead write off all the relevant underpayments“.