Millions of taxpayers could find themselves paying too much income tax and/or being taxed twice for company cars and private health insurance unless HM Revenues and Customs fixes its new computer system by April.

A glitch in the government department's new pay-as-you-earn applications, which were meant to streamline the collection of PAYE and National Insurance payments, means that the wrong codes are currently being sent out to employers.

Anyone who has changed jobs over the last couple of years is particularly vulnerable to error as the system simply assumes that workers have more than one position. People with multiple jobs usually see their personal allowances of £6,475, which is not taxed, counted against the highest earning role.

But the computer error means that the personal allowance will be split between all of them or allocated to a non-existent job, which is likely to see employers deducting too much income tax – as much as £1,250 per year.

The Chartered Institute of Taxation advised that workers under 65 should be entitled to a personal allowance and would normally receive the tax code '647L'. As a result, if they were sent a different code or receive multiple ones, they should contact HMRC to check the situation out.

But one HMRC employee, who asked to remain anonymous, told the BBC that the situation appeared to be getting worse, not better.

"When it first started, we were all getting terribly frustrated with the new system, and we didn't know if it was us or it that was the problem. But as it's gone on and on, it's evident that it's the system," she said. "We're waiting to see if things are put right by April. But none of us believe that they will be because we've heard it all before."

HMRC apologised for the situation, but denied that the system had been inadequately tested, adding that approximately 10,000 cases based on live data had been assessed to cover more than 500-plus scenarios.

A spokeswoman said that: "We fully accept our responsibility to get notices of coding right and we will be systematically reviewing all those we believe to be at risk to ensure accurate coding notices."