HMRC software struggles with ‘insanely complicated’ divi rules

Thousands of people are at risk of paying too much tax next year because computer software is struggling to keep up with ‘horrendously complicated’ changes to the taxation of dividends.

Experts have said people could end up paying hundreds of pounds too much due to errors in the software used to calculate tax for the 2016-17 tax year, The Financial Times reports.

Tax experts told the paper problems have been caused by the interaction of the new tax free allowance for dividends and savings and the 0% savings rate band.

It said while HM Revenue & Customs will provide a solution for tax returns relating to the 2017-18 tax year, those affected will in the meantime have to file paper returns.

Giles Mooney of Absolute Accounting Software told the paper HMRC’s own coders could not keep up with the ‘insanely complicated set of rules’.