One-third of self-assessment taxpayers pay wrong tax

More than three million of the ten million people who complete a tax return each year do not pay the full amount of tax.

The findings are revealed in a new research briefing by Dr Arun Advani of the University of Warwick and Centre for Competitive Advantage in the Global Economy (CAGE).

The briefing published by the Social Market Foundation found that the total tax underpaid through self assessment is about £8bn. Most of that is owed by a few taxpayers: only 2% of self-assessment taxpayers account for £4bn of the underpayment. This is equal to almost one penny on the basic rate of income tax.

Dr Advani’s report said it was important to distinguish between small errors made in good faith and large deliberate underpayments. Most of these people owe relatively small amounts. It might be that some of these cases are genuine mistakes.

HMRC audits of taxpayers’ records are...