“We apologise to those affected by this calculation error and are working to fix the issue, although the impact is small with the difference in tax owed being around £5 in most cases,” an HMRC spokesman said. The authority has acknowledged a fault in how it recorded state pension income that may have resulted in roughly 8.7 million pensioners paying about £5 too much each on average, producing as much as £43.5 million extra tax in the 2025-26 tax year. The mistake arose because HMRC used a 52-weeks assumption when recording the new state pension rate rather than the correct approach that treats 51 weeks at the current year rate and one week at the prior year rate. HMRC says it's working to fix the issue and aims to resolve it this summer, and it has set out practical steps for pensioners to claim any refund.
“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,” said Sir Mel Stride, the Shadow Chancellor. The reaction from the opposition underlines how what HMRC describes as a small per-person error has become politically charged because of its scale.
How the error happened
The miscalculation stems from figures supplied to HMRC by the Department for Work and Pensions that counted 52 weeks of the new, higher state pension rate. That approach ignored the established rule for tax liability after a rate change, which is to apply 51 weeks at the current year rate and one week at the prior year rate. For the 2025-26 tax year the state pension increased, and when that uplift was applied across 52 weeks it pushed recorded pension income slightly higher than it should have been.
HMRC has framed the problem as low-impact to individuals, emphasising the average per-person effect of about £5. But campaigners and former ministers have highlighted the aggregate reach. Sir Steve Webb, a former pensions minister, described the mistake as "remarkably careless." Conservative MP Richard Holden raised the issue with HMRC last year, and The Sunday Times reported that HMRC was first alerted in August 2025 and didn't inform the DWP until October 2025. HMRC acknowledged the issue after that parliamentary intervention and apologised to those affected while it investigates the full scope.
The error could have affected pensioners taxed in different ways. Reports say both people paying income tax through self assessment and those still working and taxed through PAYE may have seen slightly inflated bills. Self assessment cases are adjusted automatically, according to HMRC, while others may receive tax calculation letters known as P800s. HMRC issues P800s between June and March following the end of a tax year for people who have overpaid.
HMRC hasn't announced an automatic mass repayment at the time of its acknowledgement. Officials told a taxpayer that, where a refund is due and a claim is made online, it should normally take around 30 days from the date the claim was received for repayment to be processed.
That timetable will be important for pensioners on fixed incomes who rely on a prompt correction.
Beyond refunds, the episode makes people wonder about data handling between government departments. The immediate cause is an arithmetic mismatch: a 52-weeks calculation rather than the rule that allocates one week to the prior-year rate. But critics ask why routine checks didn't pick up the discrepancy sooner, and why it was not corrected before the public was alerted. HMRC says it's investigating the scope of the error while working to remedy it.
For individuals who think they have been overcharged HMRC advises checking its guidance on claiming a refund and following the online claim process. The authority’s estimate of about 30 days to process an online claim is the clearest timeline it has given to date.
The numbers cited in coverage put the potential reach and cost into sharper relief. The estimate that up to 8.7 million pensioners who pay income tax might be affected and the headline figure of as much as £43.5 million collected extra relate to applying the incorrect 52-weeks assumption to the state pension rise under the triple lock. That arithmetic, small on an individual basis, becomes politically salient when multiplied across millions of people.
HMRC has apologised publicly and said it's working to fix the calculation. How quickly pensions already taxed will be corrected, and whether a large-scale automatic repayment will follow, are the practical questions now occupying ministers and campaigners.
Related Articles
- HMRC advisory fuel rates rise from 1 June 2026
- Canada Section 216: 25% withholding or tax on net rental income
- 20% and 1.2 TB: When event logs became a liability
The test now is whether HMRC will issue automatic mass repayments and how quickly refunds reach pensioners on fixed incomes. MPs are likely to press for answers in Parliament if repayments are delayed.
This article was created with AI assistance.
