Millions of people paid billions more in tax than they owed after errors in HM Revenue and Customs (HMRC) systems during the last tax year.
Figures show that 5.6 million people across the UK overpaid a combined £3.47billion in income tax during the 2023-24 tax year.
The data was obtained through a freedom of information request submitted by accountancy firm UHY Hacker Young.
Tax specialists say mistakes on payslips and increasingly complex tax rules are driving widespread overpayments.
Employers and pension providers rely on tax codes issued by HMRC to calculate how much income tax should be deducted from wages or retirement income.
When those tax codes are wrong, employees and pensioners can end up paying too much unless they identify the error themselves.
HMRC does not have a duty to proactively notify individuals when they have overpaid through PAYE.
Neela Chauhan, a partner at UHY Hacker Young, said responsibility rests with taxpayers to ensure their deductions are correct.
"The onus is on the taxpayer to check that they are not being overcharged through PAYE, as HMRC has no obligation to tell them when this happens."
Millions of people paid billions more in tax
| GETTYShe warned that millions of people are paying the wrong amount of tax because the revenue authority is working with incomplete or inaccurate information.
"Millions of people are paying the wrong amount of tax simply because HMRC is almost guessing what they earn and for too many people this will go completely unnoticed."
"HMRC won't always correct overcharging mistakes automatically and if you don't check your tax code or your PAYE calculation you may never get your money back," she added.
The firm said many individuals remain unaware they have been overcharged and never receive refunds.
Errors commonly occur when HMRC does not have up-to-date information about a taxpayer’s circumstances, which can include incorrectly assuming someone still receives company benefits such as a vehicle, private healthcare or gym membership.
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Late or inaccurate payroll submissions from employers can further compound the problem
| GETTYMistakes can also arise where secondary income streams are wrongly assumed to continue, which can include rental income, dividends or freelance work that has already ended.
Late or inaccurate payroll submissions from employers can further compound the problem.
Emma Rawson, director of public policy at the Association of Taxation Technicians, said incorrect tax codes are likely to become more common.
"The tax system overall has become more complicated and more and more people are having deductions coded out than they did in the past."
She pointed to changes coming into force from the 2025-26 tax year.
Under the changes, people earning above £35,000 will have winter fuel payments recovered through PAYE or self-assessment.
High-income child benefit charges can also now be collected directly through payroll systems.
Ms Rawson said many people struggle to understand their tax code.
She said taxpayers often see the code as a "random string of letters" and assume it must be correct.
Others believe checking tax deductions is someone else’s responsibility.
Tim Stovold, head of tax at Moore Kingston Smith, said verifying tax codes can be extremely difficult for ordinary taxpayers.
He also highlighted problems contacting the tax authority
| GETTY"HMRC invites individuals to check their tax code but those not familiar with the tax system will quickly be baffled by the numbers and alphabet soup of letters that determine how much tax-free allowance is given when the PAYE tax is calculated."
He also highlighted problems contacting the tax authority.
Mr Stovold said millions of calls to HMRC go unanswered each year.
HMRC said individuals are responsible for ensuring their tax codes are correct, and that it's investing £500million in digital services to help taxpayers pay the right amount from the outset.