Thousands of pension scheme trustees and employees could lose out on hundreds of pounds unless HM Revenue & Customs (HMRC) comes forward about problems within its new pay as you earn (PAYE) system.
This is the view of the Chartered Institute of Taxation (CIOT), which said "huge numbers" of people could receive the wrong tax information unless HMRC does more to alert people.
According to the COIT many of the 25 million tax codes sent out this year by HMRC could be sent to the wrong people with some receiving two codes when they have only one job.
The mix up could see them paying too much tax and could also affect pension contributions, the CIOT claimed.
Andrew Hubbard, president of the organisation, said: "Most people on PAYE are used to assuming that what the taxman sends them is correct. Many file away coding notices without even bothering to check them.
"But this year, many of them are being given wrong information, and unless they spot it and tell HMRC, their employer will receive the wrong information too, and they could get a nasty shock when they open their April pay packet and see it is as much as a hundred pounds lighter than they are expecting."
Fears over HMRC’s ability to effectively deal with the situation could lead many people to contemplate additional ways of funding their retirement.
Schemes such as equity release can boost a homeowner’s income with funding taken from the value of their property assets.
The CIOT has now called on HMRC to be proactive in its advertising of the errors and to ensure there is enough staff to deal with any surge in enquiries.
