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3.5m owed Tax Rebate, but 2m owe HMRC as much as £500

HM Revenue and Customs (HMRC) have reported that as many as 5.5m UK workers paid the wrong amount of tax in financial year 2012-2013.

Of those 5.5m, a majority of 3.5m are owed a rebate, while 2m people will have to repay an average of between £400 and £500. The average refunds owed to those who have paid too much tax are in the same ballpark, with most set to receive between £350 and £500 from the taxman.

Every year we are subject to and “end of year reconciliation process” whereby our records of tax and national insurance that we have paid are compared to records held by HMRC.

HMRC has said that most people who remained in the same employment receiving the same benefits throughout the course of the year will likely have paid the correct amount of tax through PAYE. However those who have changed their circumstances, and as a result have had fluctuations in their income, may well have paid either too much or too little tax.

An HMRC spokesman said: “Around 85pc of pay-as-you-earn taxpayers pay the right amount throughout the year. This is the normal process that the PAYE system has used for 70 years”.

Those who are owed a rebate should start to receive in the next couple of weeks in the form of a payable order. This is essentially a cheque which can then be paid directly into your bank account.

On the other hand, those who have underpaid will receive a letter informing them that they will make up for the payments over the course of the next year. This will involve a change in their tax code, and deductions from their wages will be made accordingly.

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