More than 1.7 million pensioners could be affected by a tax calculation mistake linked to State Pension income, potentially leaving some people paying more tax than they should. HMRC is now urging affected taxpayers to check figures carefully before submitting self-assessment tax returns.
Pensioners Completing Tax Returns Could Be Affected
Most pensioners do not need to complete self-assessment tax returns because tax is usually deducted automatically from pensions and savings income.
However, around 1.7 million pensioners still file annual returns because they have more complex finances. This can include people who are self-employed, landlords or receive additional income outside their pensions.
As part of the tax return process, pensioners must include the amount received through the State Pension.
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HMRC Used Incorrect State Pension Calculation
Under HMRC rules, State Pension income should normally be calculated using 51 weeks at the current year’s pension rate and one week at the previous year’s rate. However, HMRC reportedly pre-populated tax returns using the current State Pension rate multiplied by 52 weeks instead.
The mistake means some pensioners may have slightly overpaid tax without realising it. Experts estimate the average difference is around £5 per person.
Pensioners Told to Check Their Tax Figures Carefully
Pension experts are now encouraging taxpayers to review pre-filled information carefully before submitting tax returns. Former pensions minister Steve Webb, now a partner at pension consultants LCP, said the error was concerning because HMRC guidance itself correctly explains how State Pension income should be calculated, reports The Sun.
He warned pensioners should not automatically assume pre-filled figures are accurate. Anyone who notices incorrect figures can amend their tax return before submitting it.
People Who Already Filed Can Request Refunds
HMRC said pensioners who have already submitted returns and believe they overpaid tax can request repayments. The department apologised for the calculation error and said most differences in tax owed would remain relatively small.
The deadline for submitting self-assessment tax returns each year remains January 31.
HMRC Faces Questions Over Tax Errors
The issue has raised fresh concerns about mistakes involving pension taxation and automatically generated information within the self-assessment system.
Experts are advising pensioners to check all figures carefully, particularly where State Pension income is involved, rather than relying entirely on pre-populated amounts provided by HMRC.
