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More than 5.5mn people in the UK overpaid tax by a total of £3.5bn in 2023-24, data has revealed, with experts blaming errors in payslips and increasingly complicated rules.

A freedom of information request showed that 5.6mn people overpaid HM Revenue & Customs by £3.47bn.

Tax codes are used by employers or pension providers to work out how much income tax to deduct from an individual’s pay or pension.

HMRC informs pension providers and employers what this code should be. However, in some circumstances the agency makes mistakes, which can result in individuals paying the wrong amount of tax if they fail to correct the error.

Neela Chauhan, partner at UHY Hacker Young, an accountancy firm that made the FOI request, said the “onus” was on taxpayers to check they were not overpaying through the Pay As You Earn (PAYE) system, as HMRC is under no obligation to check and tell them if they have overpaid.

“Millions of people are paying the wrong amount of tax simply because HMRC is almost guessing what they earn. For too many people, this will go completely unnoticed,” she warned.

“HMRC won’t always correct overcharging mistakes automatically. If you don’t check your tax code or your PAYE calculation, you may never get your money back.”

Mistakes can occur if a taxpayer’s circumstances change, but HMRC does not have the most up-to-date information. For example, this could include HMRC mistakenly assuming an employee is continuing to receive company benefits-in-kind such as company cars, healthcare or gym memberships.

Other reasons why HMRC might apply the wrong code to someone’s payslip include incorrect assumptions about an employee’s additional income, such as rental income, dividends or freelance work that they are no longer undertaking. Errors can also occur as a result of out-of-date or late employer payroll information.

Emma Rawson, director of public policy at the Association of Taxation Technicians, a professional body, predicted that the problem of incorrect tax codes could worsen in future.

“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 said.

From the 2025-26 tax year, for instance, people earning more than £35,000 will be made to repay the winter fuel payment — with the collection taking place either via PAYE or self-assessment returns, often by adjusting the tax code.

Meanwhile, individuals required to pay the high-income child benefit charge are also now able to do this via PAYE. This more complicated system means that mistakes are more likely, Rawson said.

Another reason incorrect tax codes were often left unchallenged is that many people did not understand the “random string of letters” that make up a tax code and so did not pay much attention to it, she added. Those who are aware of the code’s importance might assume “it is right or that it’s somebody else’s responsibility” to check it, Rawson added.

She urged individuals to double check their tax codes, particularly if they start a new job, get a pay rise or bonus, or if HMRC sends them a new code. HMRC has tools on its website to check tax codes and to reclaim overpaid tax.

But Tim Stovold, head of tax at Moore Kingston Smith, an accountancy firm, said it was difficult for individuals to check whether HMRC had made a mistake.

“HMRC invites individuals to check their tax code. The problem is that 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 said.

“It is becoming increasingly difficult to speak to anyone at HMRC using their helplines. HMRC acknowledges that millions of calls each year go unanswered. Digital engagement with HMRC is improving but that still requires individuals with little experience of the tax system to navigate complex HMRC systems.”

HMRC said: “Everyone is responsible for ensuring their own tax code is correct and they can manage and update their details quickly and easily via the HMRC app or their online tax account. Customers should also discuss any tax code issues with their employer first.

“The vast majority of repayments are paid promptly and we are investing £500mn in digital services to help customers pay the right tax first time so fewer refunds are necessary.”