Taxpayers await PAYE blunder letters

A small proportion of the nearly six million people who paid too much or too little income tax are set to find out whether they are due a rebate or have to make more payments.

Around 5.7 million people have paid the wrong amount of tax through the Pay As You Earn (PAYE) system because of an HM Revenue & Customs blunder.

Around 4.3 million of these have paid too much and are due a refund, but 1.4 million have underpaid and will have to hand over an average of £1,428 each.

HMRC has sent out the first 45,000 letters to people who are affected, around 30,000 of whom are due a rebate, while 15,000 have underpaid tax.

The remainder of people affected will be contacted between now and Christmas.

Experts said people hit with an unexpected tax demand may be able to refuse to pay up as HMRC could have exceeded its own time limits in which to ask for the money.

Under tax rules, HMRC must issue demands for underpaid tax within 12 months of the end of the tax year in which it became aware that people had underpaid.