HMRC to Manually Review 107,000 Overcharged Tax Calculations

HM Revenue and Customs will manually review 107,000 tax calculations from the 2025-26 tax year following reports that taxpayers were overcharged. The errors result from a longstanding flaw in the tax authority's computer system concerning beneficial ordering rules, which are designed to allocate income and savings allowances to minimize a taxpayer's bill.

Although the agency first admitted to these errors in 2021 after the founder of Absolute Accounting Software Ltd discovered the flaw, a permanent technical fix has not been implemented. This failure has forced the agency to conduct annual manual checks to correct the calculations.

HMRC expects the volume of cases requiring manual review to decrease to approximately 20,000 next year, citing rule changes in how allowances apply to dividend, savings, and property income. This incident follows a series of system failures at the agency, including previous errors involving taxes on non-existent interest and incorrect state pension figures.