HMRC Acknowledges Overcharging 1.4 Million Pensioners: Steps for Those Affected
HMRC admits overtaxing 1 400 000 people – The UK’s tax authority has publicly acknowledged a significant calculation error that resulted in approximately 1.4 million pensioners being overcharged last year. This mistake, which originated in the way state pension tax was computed, has been impacting retirees for more than ten years, with overpayments dating back to the 2010-11 financial year. During the 2024-25 period alone, the tax office gathered in excess of £2 million in additional funds from pensioners who had been charged incorrectly.
A Formal Apology from HMRC Leadership
In a formal correspondence addressed to the Chair of the Public Accounts Committee, HMRC’s chief executive, John-Paul Marks, issued a sincere apology for the oversight. His statement acknowledged the particular hardship this situation creates for vulnerable individuals.
I apologise for this error and especially to those pensioners who have been affected. I know that any shortfall matters, particularly to customers on fixed or limited incomes.
Marks further assured committee members that HMRC is prioritizing a resolution to this widespread issue. He emphasized that the organization is moving quickly to implement an appropriate solution for all affected taxpayers.
Understanding the Scale of the Problem
The number of pensioners impacted has grown considerably over recent years. Last year’s figure of 1.4 million represents a substantial increase from the 1.17 million affected in 2023-24 and the 762,000 individuals impacted in 2022-23. The error affects pensioners across different assessment categories, with 955,000 individuals in self-assessment and 760,000 in simple assessment potentially having paid too much tax due to the incorrect state pension figure being utilized in HMRC’s calculations.
While the average overpayment stands at approximately £2 per person, the cumulative effect has potentially touched millions of people since the issue first emerged. This broader context becomes clearer when considering that up to 8.7 million pensioners may have paid too much tax last year when accounting for all related issues.
How Pensioners Can Seek Refunds
At present, HMRC has not committed to automatically refunding every individual who has overpaid. Instead, the organization has requested that customers who believe they may have been overcharged reach out through standard communication channels. Pensioners have several options available to them, including telephone helplines, online digital assistants, webchat services, or traditional postal correspondence.
For those seeking specific contact information tailored to their particular tax query, HMRC provides an official Contact Finder tool on its website. This resource helps direct pensioners to the most appropriate department or service for their needs.
The Timeline of Discovery
The issue came to wider attention last month, though it had been identified earlier. According to reports from the Sunday Times, Tory MP Richard Holden first flagged the problem in August of the previous year. However, the matter was not officially communicated to the Department for Work and Pensions until October, creating a gap in formal recognition of the error.
Dan Tomlinson, the minister responsible for HMRC, had previously stated that most pensioners pay the correct amount of tax in real time. However, he acknowledged that a subset of individuals receiving the state pension were affected by a calculation error. This specific mistake resulted in their tax being calculated based on 52 weeks at the new rate rather than the correct methodology.
HMRC has become aware that for a subset of individuals in receipt of the state pension, a calculation error means that their tax is calculated based on 52 weeks at the new rate. The difference in tax owed is approximately £5. Affected individuals can call HMRC to amend any incorrect figures of state pension.
While the per-person difference may seem modest at around £5, the cumulative impact across millions of pensioners represents a significant financial matter. HMRC’s decision to require pensioners to contact them directly rather than issuing automatic refunds means that some individuals may need to take proactive steps to recover their overpayments. The organization continues to work on refining its approach to ensure that all affected pensioners receive the compensation they are owed.
