An error has led to HMRC overcharging UK pensioners. The number of those affected is thought to be 8.7million, with officials warning that people have paid an average of £5 more in tax than they needed to. This would mean as much as £43.5million would have been collected wrongly last year.
The government is aiming to roll out a fix later this summer. Bosses did not account for the yearly increase in the state pension under the triple lock. In 2025/26, the new pension was £230.25 a week, a rise from £221.20 in 2024/25.
Therefore, state pension income was registered at £9.05 higher than it should have been, meaning tax would increase by £1.81 for basic-rate tax payers, £3.62 for higher tax payers and £4 for additional rate taxpayers. The error impacted pensioners who pay income tax via self-assessment, as well as individuals who are still in employment who pay via pay as you earn (PAYE).
“We apologise to those affected by this error and are working at pace to fix the issue, although the impact is small with the difference in tax owed being around £5 in most cases,” an HMRC spokesperson said, according to The Independent.
Sir Mel Stride told The Sunday Times: “If HMRC have been charging millions of pensioners too much tax then questions need to be answered and the matter must be urgently put right.
“Ministers need to ascertain what has happened and what action is being taken to ensure these sorts of errors do not happen again.”
Government guidance reads: “If you go over your Personal Allowance and you have tax to pay, HMRC will send you a Simple Assessment tax bill.
“This will tell you how much you owe and how to pay it.
“After your first year of getting the State Pension, you’ll pay tax based on 52 weeks of payments each year.
“If your income is below your Personal Allowance, you usually will not need to pay tax.”
It added: “Your employer will usually take any tax you owe off your earnings, including any tax you owe on your pension.
“If you’re self-employed you must fill in a Self Assessment tax return at the end of the tax year. You must declare your overall income, including the State Pension and money from private pensions, for example your workplace pension.”
As regards other income, Brits must let HMRC know about any income they receive that is not from an employer or a pension. The government says: “You might have to fill in a Self Assessment tax return to report this.
“If you owe any tax on investment income, HMRC will send you a calculation telling you how much you owe and how to pay it.”