HMRC will have to manually check more than 100,000 of its own tax calculations amid concerns Brits have been overcharged.
A computer error is understood to incorrectly have allocated some taxpayers’ income and savings allowances.
The taxman first admitted to issues in 2021, with officials forced to go over calculations to check for irregularities.
A fix has not yet been implemented, meaning the problem reoccurs each year.
For the 2025-26 tax year there are 107,000 calculations that require reviewing due to concerns that HMRC may have overcharged taxpayers.
The issue occurs because of a failure to correctly apply the “beneficial ordering” system to an individual’s tax liability.
Under the rule, HMRC must calculate taxpayer’s personal allowances and tax bands in the way that will result in someone paying the lowest possible tax.
Everyone in the UK is entitled to the £12,570 tax-free personal allowance. But other tax rules – such as the marriage allowance for couples, or the £1,000 personal savings allowance – apply to some people.
While HMRC is routinely flagging cases where either believes there may be an issue, there is no way of knowing how many taxpayers are being overcharged but their cases missed.
Stefanie Tremain, of accountancy firm Blick Rothenberg, told The Telegraph: “We may not be talking about huge amounts but you don’t know how much that money is worth to the person who is receiving it.
“If it was the other way around, and the taxpayer owed HMRC, I don’t think they would say not to worry about it – they would want it.”
Officials insist they are getting on top of the problem and the number of manual reviews is set to vastly decrease for the 2026-27 tax year.
Anyone who thinks they are due a tax refund can contact HMRC via their online account or by calling 0300 373 9020. HMRC’s phone lines are open Monday to Friday 8am to 8pm, and Saturday 8am to 4pm.
Claims for a refund must be made within four years of the end of the impacted tax year.
A HMRC spokesman 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.”
Earlier this year HMRC was forced to admit it has also over-taxed retirees on their state pension for at least a decade.
The taxman admitted it had been aware since at least 2016 that as many as 8.7 million pensioners may have paid more than necessary.
An error arose due to a miscalculation from HRMC regarding the rise in the state pension each year.
A spokesperson for the government department apologised fr the ongoing issue and vowed to rapidly rectify the situation.
They said: “We apologise to those affected by this error and are working at pace to fix the issue, although the impact is small with the difference in tax owed being around £5 in most cases.”
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