The UK's tax authority, HMRC, may have overcharged approximately 107,000 taxpayers in the 2025-26 tax year due to a technical error in its system that incorrectly calculated tax-free allowances. These allowances include personal allowances, which allow individuals to earn a certain amount of income without paying tax, as well as dividend and savings allowances, which apply to income from investments and savings. The error caused some taxpayers to be charged more than they should have been, leading to higher tax bills than expected. HMRC has announced it will review the tax returns of these 107,000 affected individuals to correct the mistake. The issue was first identified in 2021, but the system error has not been fully resolved. As a result, many of these cases require manual checks by HMRC officials to ensure the correct tax calculations are applied. This process is time-consuming and has led to delays in resolving the overcharges. The glitch has drawn criticism from tax experts, who argue that even small overcharges can have a meaningful impact on individual taxpayers. For some, the additional tax owed could represent a significant portion of their income, especially if they are on lower wages or have limited financial resources. The error highlights the challenges of managing complex tax systems and the potential consequences of relying heavily on automated processes. HMRC has expressed confidence that the number of cases needing manual review will decrease to around 20,000 in the following year as tax rules and rates change. This reduction is expected to simplify the process and allow the tax authority to address the issue more efficiently. However, the ongoing problem underscores the need for continued improvements in the accuracy and reliability of HMRC's systems.