6 million people have paid the wrong tax! What has gone wrong?

It is not a surprise that 6 million people have paid the wrong tax as reported in recent headlines. And nothing new has gone wrong.

The PAYE system (first introduced way back in 1944) was never designed to cope with the complexity of today’s tax system. With some investment income being taxed at different rates to earned income, like from employment, and with the complexities of the taxable benefits & expenses code, which affects nearly all taxpayers in employment, the system is bad enough even before delving into the horrendous nightmare which is the tax credits regime.

The surprise is not that many people have paid the wrong tax but that HM Revenue & Customs have got a handle on how many people might have paid the wrong tax.

What we need is a more simplified tax system so that the ordinary taxpayer can better understand what their tax position is and have faith that the PAYE system can more readily deduct something closer to the right amount of tax.