HMRC's costly tax error impacts 1.7 million people
HMRC has apologised for a serious taxation error which is estimated to impact over 1.7 million Brits.
A vast proportion of UK state pensioners were grossly overcharged on their tax bill last year.
The error was pointed out this week by financial expert Grant Thornton.
The mistake has seen almost 2 million pensioners responsible for completing their own self-assessment forms, and those who are still in employment that pay via PAYE (Pay As You Earn), charged approximately £5 each, meaning a staggering £43.5 million was accidentally collected last year.
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It came as a result of HMRC failing to account for the annual state pension rise under the triple lock, which secures an increase of either average earnings, the highest figure of inflation, or 2.5 per cent.
The 2025/2026 new state pension was upped from £221.20 the previous year to £230.25 per week, meaning income was recorded at £9.05 higher than it should have been.
This meant tax increased for basic-rate payers by £1.81, for higher-rate payers by £3.62, and for additional-rate taxpayers by £4.
By HMRC's own admission, those affected by the error paid an average of £5 extra.
According to a spokesperson for the UK's official tax, payments and customs authority, the team have long been aware of the overcharging error, and has been striving to fix it since last year.
According to The Sunday Times, the issue was raised in August of last year by Conservative MP Richard Holden, but HMRC didn't alert the Department of Work and Pensions (DWP) for a further two months, in October.
"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," they told the press.
The HMRC representative also claimed the body is aiming to introduce a fix later this summer to set things right.
The Shadow Chancellor of the Exchequer, Conservative politician Sir Mel Stride, told The 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."
Rhianna Benson