HMRC State Pension Error Warning
HMRC has confirmed an issue involving the State Pension figures used in some tax calculations, meaning some pensioners may have had an incorrect amount used when their tax was worked out.
The problem relates to the way State Pension figures were carried into PAYE reconciliations, Self Assessment and Simple Assessment calculations. HMRC says the issue has affected calculations going back several tax years.
How Many People Could Be Affected?
HMRC’s latest accounts show the scale of the issue.
At its peak in the 2024/25 tax year, around 1.4 million PAYE customers paid too much tax because of the incorrect State Pension figure. HMRC also identified up to 955,000 Self Assessment customers and around 760,000 Simple Assessment customers where an incorrect State Pension figure was used.
This does not mean everyone in these groups lost money. The amount of any overpayment depends on the difference between the correct and incorrect State Pension figure and the person’s marginal tax rate.
Could Your Tax Have Been Affected?
HMRC says the average estimated loss in a single tax year was relatively small — around £1.76 for someone receiving the full basic State Pension and £2.30 for someone receiving the full new State Pension at basic-rate tax.
However, the issue is important because it could have affected tax calculations over several years.
HMRC has said it is implementing a solution to prevent the error from recurring and to correct affected calculations.
What Should Pensioners Do?
If you receive State Pension alongside other taxable income, check your HMRC tax calculations and any PAYE, Self Assessment or Simple Assessment paperwork.
The issue is separate from mistakes in the actual State Pension entitlement. DWP’s latest figures also show State Pension underpayments, with contribution-record discrepancies remaining an important source of errors.
The key point is that not every pensioner has been overcharged, but HMRC has confirmed that incorrect State Pension figures were used in some tax calculations and that affected records are being addressed.