HMRC’s scans found about 107,000 customers may have overpaid (Image: Getty)
An error at HMRC means over 100,000 tax calculations have been reviewed. The tax authority manually checked 107,000 records for the 2025-26 tax-year after complaints of overcharging from some taxpayers.
A number of cases have seen the incorrect application of individuals’ tax free allowances across sources of income, including earnings, dividends, interest on savings and pensions. Known as beneficial ordering of allowances and reliefs, this sees HMRC apply tax allowances and rate bands to reduce taxpayers’ bills by the largest amount possible when they have different types of income.
HMRC carries out scans of PAYE records to trace taxpayers whose circumstances show they might not get the most from it.
But the IT error meant HMRC staff had to manually check thousands of tax bills to make sure they were correct, GB News reports.
For the most recent tax-year, HMRC’s scans found about 107,000 customers whose records showed they might not have got the most from beneficial ordering.
Tax expert, Tim Good, founder of trade publication AccountingWEB, told the broadcaster HMRC doesn’t always crunch the numbers correctly.
Mr Good said: “I picked it up in 2021, but the system hasn’t been corrected, so we still get these discrepancies to this day.”
Stefanie Tremain from accountancy firm, Blick Rothenberg, said the overpayments may not be huge amounts, but the money may mean much to the person receiving the refund.
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A HMRC spokesperson said: “We take extensive action to identify the minority of customers who may be affected and update their tax calculations as needed to ensure they pay the right tax.
“The number of calculations requiring a manual check is expected to fall to around 20,000 next year.”
For tax year 2025-26, HMRC’s scans identified about 107,000 customers whose records may not have received the most beneficial ordering of allowances and reliefs. This represented about 0.24% of the total PAYE population, according to HMRC.
The tax authority expects changes to tax rates for property, savings and dividend income from April 2027 to cut the number of customers who need manual review to about 20,000, representing around 0.05% of the PAYE population.
Customers can check their PAYE calculations at the end of the tax year and contact HMRC if they believe their tax position is incorrect. HMRC will check the calculation and refund any overpaid tax.
