HMRC mistakes cause 5.6m people to overpay tax

Nearly 6m people in the UK overpaid tax from 2023/24, overpaying £3.5bn in income tax. Experts are blaming errors with tax codes and overly complicated rules.

And HMRC will tell you in the lowest case lettering ever… they won’t shout about it like they do when you owe them! https://t.co/PZsZfZJ06W

— Ash (@theashrb) January 19, 2026

HM Revenue and Customs (HMRC) issues tax codes. Employers and pension providers then use these to calculate how much income tax to deduct from your pay and pension.

However, HMRC often screws up. So basically, you could be paying too much or not enough income tax.

According to Sky News:

The tax office can issue the incorrect tax codes due to:

• Assuming that an employee is still receiving company benefits-in-kind such as company cars, healthcare and even gym memberships even though they may no longer be receiving that benefit;
• Incorrect assumptions about an employee’s additional income, such as rental income, dividends, or freelance work that they are no longer doing;
• Confusion over how many jobs an individual is working;
• Out-of-date or late employer payroll information.

Is there anything the government can’t screw up?

HMRC attempting to make tax digital

This comes at the same time as HMRC is attempting to digitalise the tax system for self-employed individuals. It makes you wonder how the government will ensure digital software works successfully when the current system for employed individuals is already failing so badly.

Not for the first time HMRC prove to be completely and utterly incompetent with the services they provide. How come you can identify me when I, allegedly, owe you money but when I try and challenge this you don’t recognise me 🤔 @HMRCgovuk Some things in life never ever change pic.twitter.com/5nUcxynVIe

— Jamie Sharp (@SharpBadger) January 15, 2026

Will take a year to refund them btw. If you underpay by two cents, they’ll have stormtroopers outside your front door in 2 days. https://t.co/1kIqAB5NXB

— Cataclysm (@dexvxov) January 19, 2026

Not to worry. They only took 13 months to repay me £9,400 https://t.co/3y8qNA1VdT

— Ricky (@RiccardoTanoh) January 19, 2026

Importantly, these figures were only uncovered due to a Freedom of Information request from UHY Hacker Young, an accountancy firm.

The firm added that HMRC will not usually correct mistakes itself. This means taxpayers are responsible for making sure their tax code is correct.

You can guarantee that if you owe HMRC a penny, they will spam you with letters and will not let you forget it. But if they owe you £5k? You’ll probably be on hold for several days, end up in a padded room because of the same annoying song on repeat, and resort to using a carrier pigeon because, of course, Royal Mail is failing too.

Feature image via YouTube/ DWP INSIGHT UK