Have you been overpaid this month?

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by: bythesea
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Word Count: 447
Date: Mon, 31 May 2010 Time: 2:22 AM
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Thousands of consumers could find themselves overpaid this month after a system error saw them sent the wrong tax codes. We explain what happened.

It feels like government computer gaffes have been a weekly occurrence in recent years - not great news when you've got an election to win.

Two years ago, HM Revenue and Customs managed to lose CDs containing the personal and financial details of 25 million people. Not content with that gigantic slip, HMRC have now posted out the wrong tax codes to thousands of UK taxpayers - potentially leaving many people overpaid and saddled with a growing tax debt without their knowledge.

While the issue was well publicised when the codes were sent out back in February, it's likely that many will still not be aware of any problems. This is because people may have received a raft of confusing ‘coding notices' or even none at all. Furthermore, in some cases, different tax codes may have been sent to employers and pension providers than were sent to the payees themselves.

As a result, the fear is that employees and a large number of pensioners - who may receive income from a number of different sources - could find themselves receiving the wrong amounts in their April pay packets, as 2010/11 tax codes take effect for the first time. While we all love an unexpected bonus, anyone affected will, unfortunately, have to pay back the difference eventually. So the moral of the story is, if in doubt, check your payslip for any unusual amounts.
The Low Incomes Tax Reform Group (LITRG) has advised the following to all taxpayers:

• Check, as a matter of course, any coding notices you have received from HMRC. You should receive one for every job or pension you have, so if you don't - or if you have trouble understanding the documentation - get in touch with them immediately.

• Next step is to check your payslip to ensure that the code number correlates with that sent by HMRC. Some pension companies only issue yearly P60s rather than regular payslips, so if that is the case you might be best calling your provider to check that they are using the correct code.

• You might also be able to tell by checking your bank statements - if your April pay is substantially and unexpectedly different from the previous month, then this suggests your codes could be wrong.

While it's certainly not the most exciting subject on the planet (trust me, I've written about it!), checking your tax codes is one of those annoying little jobs that, once done, ensure you don't fall into the trap of building up a nasty debt completely unawares.

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If you have been struggling with debt because of overpayment then it might be worth checking your credit cards and savings deals to help save you money.