Tax repayment written off for many
Nearly one million people who did not pay enough income tax have had their repayment demands written off, it has emerged.
An estimated 900,000 workers will not receive a letter from HM Revenue & Customs (HMRC) demanding extra money after the Government raised the threshold under which it writes off any tax that is owed from £50 to £300.
It is thought that 2.3 million people have underpaid income tax during the past two tax years due to errors in their Pay As You Earn (PAYE) tax code, but only 1.4 million of these will be chased for the money.
Those who will have to make up the shortfall collectively owe around £2 billion, or an average of £1,428 each.
But Exchequer secretary David Gauke promised that the Government would make collecting the money people owed "as painless as possible".
People who owe less than £2,000 will be able to pay the money in monthly instalments taken from their salary during the 2011/2012 tax year.
Those who can show they are unable to afford to repay all of the money in one year will also be given the option of paying it back over three years.
Mr Gauke said: "In total, the Exchequer is owed approximately £2 billion. Being left with the worst deficit in peacetime history means we simply cannot afford to write off all of these underpayments.
"To ensure that the tax system is fair for everyone, where everyone pays their fair share, we are taking action to recoup these funds as painlessly as possible."
But those who owe more than £2,000 could be charged interest of 3% - six times higher than the Bank of England base rate - on the money they owe if they do not repay it within deadlines set by HMRC.