HMRC has confirmed the error affecting state pensioners.
HMRC has confirmed the error (Image: Getty)
HMRC has issued an apology after a tax charge error was confirmed to affect state pensioners.
An estimated 1.7M state pensioners who complete self-assessment forms could have been impacted by the error, spotted by financial expert Grant Thornton.
HMRC urges anyone who receives non-PAYE income, such as freelancers, landlords and other forms of self-employment, to submit a self-assessment tax return before the end of each January.
But for state pensioners submitting returns, HM Revenue and Customs’ online systems had been automatically inserting state pension income based on 52 weeks at the new rate of state pension.
This is despite the guidance from the tax office that state pensioners should actually submit 51 weeks at the new pension rate, and one week at the old rate.
The difference came about because the DWP supplied data was calculated differently for HMRC’s legal requirement for self-reporting tax.
State pensioners submitting the forms without spotting and manually correcting the error could have paid slightly more tax than was needed.
However, ‘in most cases’, HMRC said the error was only a £5 difference.
Steve Webb, partner at pension consultants LCP, said: “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.”
An HMRC spokesman said: “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.”
The new tax year 2026-27 began in April, which means that the previous tax year, 25-26, has now ended.
Anyone who needs to submit a self-assessment tax return will be required to do so by January 31, 2027 for those submitting online (or October for paper), but HMRC is encouraging people to submit early, with tens of thousands of tax returns already submitted for the tax year just ended.