6 Million Brits Owed Tax Rebate

There are approximately six million of us in the UK who are due to receive refunds to an average of £400, and some reaching the £1,000s. This finding follows the annual check of who paid what, which also uncovered the one million people who have not paid the right amount of tax, owing an average of £600.

This is not the first time these inconsistencies have been uncovered. It follows the introduction of a new computer system at the HM Revenue and Customs, which is tracking down reconciled cases dating back many years. The good news is that anyone owed money will be paid back with interest without the need to contact them (although they do not give a timeframe for this!).

As the first letters start to find homes across Britain, here are some valuable need-to-knows:

• WHAT IS A TAX CODE?
  • These are a series of digits which tell your employers how much tax to deduct. One of the most common is the 747L code. Add a five to the end of the numbers (£7,475) and you’re presented with the amount you can earn before income tax is taken.

• THE WRONG POSTAL ADDRESS MEANS YOU WILL MISS THE REBATE
  • The HMRC must have the correct address for you in order to post out your tax rebate. If you’ve moved, or assume that your employer updates the address, think again. Update your address here: HMRC address update form

• REBATES ARE NEVER EMAILED – WATCH OUT FOR FRAUDSTERS
  • THE HMRC never sends emails or phones anyone to inform of tax rebates. When the news of the tax rebates broke, this spurred on fraudsters to call and email claiming to be the HMRC with the single goal of getting your banks details. NEVER give out personal information over the phone or by email.

• PROBLEM AFFECTS EMPLOYEES, NOT JUST THE SELF-EMPLOYED
  • Only employees (full or part-time) and some with private pensions receive a tax code, as this is all about Pay As You Earn deductions. Those with more than one job or pension, plus the recently retired are most likely to be affected.

• NEW REFUNDS FOR TAX YEARS 2003-2008
  • The new errors are for the 2003-2008 tax years. On top of your rebate (and you could receive more than one), you will also receive 0.5% interest. The average refund is £300 per person, and cheques are due between now and December 2012.

• 1.2 MILLION TO PAY BACK
  • Those who have underpaid are for the tax year 2010/11, and owe an average of £600. It will usually be deducted gradually from next year’s pay packet. If you owe over £3,000, they will ask you to pay a lump sum – if you haven’t got it, ask to repay gradually

• FIGHTING BACK ISN’T LIKELY TO WORK
  • If the tax man takes over a year to inform you or an error, there’s a chance you can fight back. This year however, the cases are all new and still within the ‘year’. HMRC will write off demands under £50 though.

• TAX DEADLINES
  • Those who file self-assessments by paper can revel in self-satisfaction now the job has been done for the year. If you’ve missed the paper deadline, don’t fear, you have until 31 January 2012 to file Online. Register here HMRC online service or This e-mail address is being protected from spambots. You need JavaScript enabled to view it , who can submit on your behalf.