HM Revenue and Customs has apologised to around 1.7 million state pensioners after admitting its own software taxed them on a pension figure it was never meant to use.
The fault lies in the self-assessment system. For pensioners who file a return, HMRC's online tool was pre-filling state pension income at 52 weeks of the new, higher rate. Its own published guidance says the entry should be one week at the old rate and 51 weeks at the new one, as the Daily Express first reported.
The discrepancy matters because the state pension rises every April under the triple lock. For the 2025-26 tax year, the full new state pension went up from £221.20 ($297) a week to £230.25 ($309). Counting an extra week at the higher rate overstated taxable pension income by £9.05 ($12), nudging some bills above what was actually due.
HMRC put the typical cost at about £5 ($7) a head. '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,' a spokesman said. Accountancy firm Grant Thornton spotted the mistake.
There is no automatic refund. The onus is on the pensioner to spot the error and reclaim the money.
Why the HMRC State Pension Tax Error Happened
Two parts of government counted the same money differently. The Department for Work and Pensions supplied pension data on a flat 52-week basis, while HMRC's reporting rules require a split-week method, reflecting how entitlement builds up across the tax year.
The pre-filled figure followed the DWP approach rather than HMRC's own rulebook.
How Many Pensioners the Tax Blunder Could Affect
The 1.7 million headline figure covers pensioners who complete self-assessment and saw the wrong number pre-filled. The wider pool is larger, because the same flawed basis can reach retirees taxed through PAYE. Sunday Times reported that as many as 8.7 million income-tax-paying pensioners could have been affected, with HMRC potentially collecting an extra £43.5 million ($58 million) over the past year. The department has not confirmed a precise total.
The newspaper also set out the timeline that critics have fixed on. HMRC was alerted to the fault in August last year, after Conservative MP Richard Holden raised it, but did not tell the DWP until October.
Sir Mel Stride, the shadow chancellor, called for answers. '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,' he said. 'Ministers need to ascertain what has happened and what action is being taken to ensure these sorts of errors do not happen again.'
HMRC says it expects to clear the issue this summer. Only a fraction of the 13.2 million people who draw the state pension file self-assessment, so most will never have touched the faulty figure.
How to Check and Claim Back Overpaid Tax
Anyone yet to file for 2025-26 can avoid the problem outright. Check the pre-filled pension figure against the DWP uprating letter sent before the tax year began, then correct it before submitting.
Those taxed through PAYE can check the state pension figure on their P800 calculation and contact HMRC if it looks wrong. Pensioners who have already filed a return and overpaid can amend it online or request a refund directly. The online filing deadline for 2025-26 returns is 31 January 2027, though HMRC is urging people to file early. Guidance on changing a return is on GOV.UK.
Sir Steve Webb, a former pensions minister and now a partner at consultants LCP, said the error should have been prevented rather than patched. 'Although the sums involved per person are small, it is quite shocking that so little care seems to have been taken to get this right in the first place, rather than fix it after people have been over-taxed,' he said.
