HMRC overcharges millions of UK pensioners on income tax

HM Revenue & Customs (HMRC) admitted a calculation error that caused many pensioners to be overcharged income tax. The agency used a 52‑week figure for the state pension after annual increases under the triple‑lock, instead of the correct 51 weeks at the new rate plus one week at the previous rate.

The mistake may have affected as many as 8.7 million pensioners who pay income tax, adding roughly £5 to each person's tax bill and resulting in an estimated £43.5 million of excess revenue. The error persisted for at least ten months after it was first flagged in August, but HMRC did not inform the Department for Work and Pensions until October.

HMRC has apologized, said it will resolve the issue by the summer and urged affected individuals to contact the agency for refunds. Shadow Chancellor Sir Mel Stride and former pensions minister Sir Steve Webb criticised the “remarkably careless” handling and called for a review to prevent similar mistakes.