HMRC is due to issue £19 million in refunds
Approximately £19 million in refunds is due to be distributed by HMRC following a tax mistake that resulted in state pensioners being overcharged for more than 15 years. The repayments work out at roughly £6 per individual on average, and will be backdated to the 2020/21 tax year.
This follows an investigation by The Telegraph which revealed that millions of state pensioners paying income tax faced excessive charges since 2010.
HMRC’s tax regulations stipulate that the calculation should incorporate one week at the previous year’s lower rate and 51 weeks at the current year’s higher rate. This is intended to account for the short interval between the beginning of the tax year and the Monday when new pension rates come into force.
However, a mistake meant that some pensioners had been taxed for 52 weeks at the increased rate, based on data provided by the Department for Work and Pensions ( DWP ).
As a result, the slightly elevated tax bill each year for over 15 years led to millions of pounds in excess tax payments, reports the Express.
Despite this, HMRC will not be issuing blanket refunds for the period spanning 2010 to 2020, explaining that individuals who think they were impacted during that timeframe should provide their own evidence to be heard case-by-case.
HMRC chief executive John-Paul Marks informed MPs on the Treasury select committee: “If customers believe they were affected in earlier years and have the necessary evidence, they can ask HMRC to review their position. These requests will be considered on a case-by-case basis.”
The sums owed back annually are relatively modest. Those receiving the full basic state pension can expect just £1.76, while those on the full new state pension are due £2.30.
That said, additional-rate taxpayers on the new state pension could be in line for up to £8.42 for 2023-24. Repayments will be processed through tax code adjustments, Self-Assessment credits, or cheques where required.
“I am sorry that this error occurred and recognise the impact on affected customers,” Mr Marks added. “We will also conclude an internal audit review, ensuring the lessons are identified and applied in future.”
Looking for more from MyLondon? Subscribe to our daily newsletters here for the latest and greatest updates from across London.
