Tax Blunder: Six Million In Line For Rebate

Six million people are set to receive tax rebates of around £300 each.

But there is bad news for one million others who will be told they have underpaid - to the tune of £600.

Her Majesty's Revenue and Customs (HMRC) has carried out an annual check to make sure the amount of tax and National Insurance deducted by employers matches its records.

One million people will receive letters in the next few months notifying them that they have paid too little tax.

The average amount owed is expected to be between £500 and £600, an HMRC spokesman said.

He explained that those affected will be able to pay the amount back in stages, if necessary, by either having their tax code adjusted or coming to an agreement with the Inland Revenue.

The process to credit the six million, who paid too much tax in the 2007/8 year, or earlier, will take longer but HMRC hopes to have it completed by December 2012.

Last year the Inland Revenue brought in a new IT system which made it easier to spot discrepancies and therefore more cases where people have over or underpaid came to light.

The HMRC spokesman said: "Money that is owed going back many years is now going to be automatically paid back as we get the tax system up to scratch.

"We are getting cases that were left unreconciled up to date as quickly as possible. Anyone owed money will be paid back with interest without the need to contact us.

"The fact is there will always be some cases at the end of every tax year that require an under or overpayment to balance but these cases will reduce as the new system beds in."