HMRC fears thousands may have been over-charged

Around 30,000 people are to have their tax returns reviewed by HM Revenue and Customs (HMRC) amid fears they have been over-charged, according to reports at the weekend.

It is understood an error in HMRC’s calculations could mean thousands of people may have received incorrect tax bills in 201617. The problems relate to the personal savings allowance and the dividend allowance.

Under the savings allowance, basic-rate payers can earn up to £1,000 in savings interest tax free, while the allowance for higher rate payers is £500.

A new dividend allowance was introduced in 2016-17, giving them £5,000 tax free. Beyond that, they were taxed at 7.5% for basic-rate payers, 32.5% for higher-rate payers and 38.1% at the top rate.

An investigation will be started by HMRC next month and people affected will receive a new calculation.

HMRC has said that each year there is a “small proportion” of tax payers with complex affairs whose returns require a manual check to ensure accuracy. The investigation is due to start on November 19.