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Pensioners could be owed a tax refund following developments in an HMRC error that affected the State Pension. An error in the PAYE system in 2010 could mean those collecting their State Pension are affected by incorrect figures and a higher tax margin when HMRC calculated their bills.
HM Revenue and Customs announced the error earlier this year and has since issued an update, with bosses writing to Members of Parliament. The mistake is believed to have affected PAYE end-of-year reconciliations and may also extend to Self Assessment tax returns and Simple Assessment calculations. As a result, hundreds of thousands of pensioners are believed to have paid too much tax since 2010.
In a letter to the Chair of the Public Accounts Committee, John-Paul Marks, Permanent Secretary, wrote: “I apologise for this error and especially to those pensioners who have been affected. I know that any shortfall matters, particularly to customers on fixed or limited incomes.
“I would like to reassure the Committee that HMRC is taking this issue very seriously and we are working at pace to put in place a solution.” HMRC has since confirmed it is working to permanently rectify the issue, The National reported.
The department has announced plans to introduce a solution to future tax calculations using the correct State Pension figures. Those affected do not presently need to contact HMRC.
Those who are concerned about their current tax state can check their latest tax calculation and get in touch with HMRC to enquire about figures which may appear incorrect.
While HMRC estimates that most overpayments are likely to amount to only a few pounds a year, some pensioners may be entitled to larger refunds. These larger refunds are dependent on their individual circumstances.
It comes as HMRC sent out letters on June 1 to around four million people. This mailout will extend until the end of August. Officials said: “You must respond to the letter so we can make any repayments owed to you as soon as possible.” According to the tax authority, the average unclaimed repayment stands at £473.
