HMRC has confirmed a tax charge error that affects approximately 1.7 million state pensioners who complete self-assessment forms. The mistake, identified by financial expert Grant Thornton, has prompted an apology from the tax authority.
Nature of the Error
HM Revenue and Customs' online systems automatically inserted state pension income based on 52 weeks at the new rate of state pension. However, according to HMRC guidance, state pensioners should report 51 weeks at the new rate and one week at the old rate. This discrepancy arose because the Department for Work and Pensions (DWP) supplied data was calculated differently from HMRC's legal requirement for self-reporting tax.
Impact on Pensioners
State pensioners who submitted forms without manually correcting the error may have paid slightly more tax than necessary. In most cases, the difference amounted to only £5. Steve Webb, partner at pension consultants LCP, commented: "The way the state pension is taxed is a regular source of confusion, but it is worrying that HMRC seem to have been getting it wrong themselves."
HMRC Apology
An HMRC spokesman stated: "We apologise to those affected by this calculation error, although the impact is small with the difference in tax owed being around £5 in most cases."
Next Steps for Affected Pensioners
The new tax year 2026-27 began in April, meaning the previous tax year (2025-26) has ended. Anyone needing to submit a self-assessment tax return must do so by January 31, 2027 for online submissions, or October for paper returns. HMRC encourages early submission, noting that tens of thousands of returns have already been filed for the just-ended tax year.
