More than 10 million people may be in line for a tax rebate due to errors in the HM Revenue and Customs tax code system.
The Treasury has already announced that 4.3 million people are set to receive a rebate because they have paid too much tax over the past two years. But historic errors may have resulted in a further 5.8 million people overpaying income tax before March 2008.
Tax officials have identified £3bn in overpaid tax from the years before then, in addition to the £1.8bn of overpayments in the past two years, according to the Daily Telegraph. It said the HMRC has 18.2 ?million "open" cases of incorrect tax payments pre-dating March 2008.
HMRC hopes to repay at least some of that money over the next four years, the paper said. On Saturday, the Treasury said nearly 6 million people in the UK are to be told they have paid the wrong amount of tax in the past two years, with some facing bills of up to £5,000. The further errors identified since then could add a further 7.7 million people to the total number affected.
Around 1.4 million people are due to be told they owe an average of £1,400 because of errors in HMRC's calculations of the pay as you earn (PAYE) tax system over the past two years. They will have their tax code altered next year to retrieve the money, which on average should be £1,428. The errors were identified by a new computer system that found widespread underpayments by employers through the PAYE system, which total about £2bn.
Employees who moved jobs or accepted company cars or cash benefits from their employer were the most likely to be caught by the system. The 4.3 million people set to receive a rebate because they have paid too much tax in the past two years are expected to receive an average of £418.
The first letters from HM Revenue and Customs (HMRC) are expected to arrive on doormats tomorrow.
It is believed that in some cases individuals may have both underpaid and overpaid, and the amounts could cancel one another out. In some cases, HMRC will consider writing off demands where taxpayers can demonstrate that they provided all the information necessary to calculate their tax correctly.
The problems arose because at the end of each year HMRC manually checked that the amounts deducted in tax and national insurance by employers using the PAYE system match up with the information held on their records. Those checks have now been computerised.
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