Full Breakdown
HMRC Tax Miscalculation Overcharges Millions of Pensioners by £5 Each
6/15/2026, 11:22:26 PM
Error in State Pension Tax Calculation
HM Revenue & Customs applied new state-pension rate for all 52 weeks of the tax year rather than the required 51 weeks at the new rate plus one week at the previous rate. The misapplication added about £5 to the income-tax bill of each affected pensioner. Under HMRC guidance, brief period between the tax year start (5 April) and the first uprated payment must use the prior year’s pension figure. The 2025/26 uplift raised full pension from £221.20 to £230.25 per week, a £9.05 increase that inflated taxable income.
Key Officials' Statements
Treasury minister Dan Tomlinson told Parliament the “difference in tax owed is approximately £5.” HMRC apologized, saying it is updating records and urging pensioners to contact its helpline; no automatic refunds have been issued. Sir Steve Webb, pensions minister, called the mistake “remarkably careless.” Sir Mel Stride, chancellor, demanded a review, calling the situation “quite shocking.” Antonia Stokes, Low Incomes Tax Reform Group, warned the system places “far too much reliance on taxpayers performing their own calculations.”
Scale of the Overcharge
Estimates suggest up to 8.7 million pensioners may be affected, representing an over-collection of about £43.5 million. The average excess tax per person is roughly £5.
Criticism and Opposition
Consumer groups and opposition MPs argue HMRC’s reliance on self-verification of pre-populated figures undermines confidence in the tax system. LITRG’s Antonia Stokes urged the agency to proactively correct erroneous entries rather than wait for refunds.
Conflicting Reports & Gaps
All sources agree on the £5 per-person overcharge and the £43.5 million total, but the number of affected pensioners is reported as “up to 8.7 million” in some outlets and “as many as 8.7 million” in others. No source gives data on how many have sought refunds.
Verbatim Quotes
- “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.” — HMRC spokesman
- “ Sir Steve Webb, a former pensions minister in the coalition government and a partner at pension consultants LCP, said: “It seems remarkably careless to tax potentially millions of pensioners on the basis of the wrong state pension figure.” — Sir Steve Webb, pensions minister, LCP
- “Sir Mel Stride, the shadow chancellor, said: "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.” — Sir Mel Stride, chancellor
- “We have long been concerned that the calculation of the annual taxable state pension figure is difficult to understand and places far too much reliance on taxpayers performing their own calculations to arrive at the necessary figure, or to verify the amount pre-populated by HMRC.” — Antonia Stokes, LITRG senior manager
HMRC Response and Timeline
HMRC aims to finish corrections by summer 2026 and will continue handling refund requests. The DWP’s back-payment programme may generate taxable income, prompting HMRC to assess tax on arrears for current and four preceding tax years. Parliamentary scrutiny is expected to intensify as opposition parties seek a review.
