8.7 million pensioners may have overpaid tax after HMRC state pension error

HMRC has admitted a calculation error that may have led it to charge as many as 8.7 million pensioners too much income tax on their state pension, according to the Daily Mirror. The tax authority says the difference in tax owed is around £5 in most cases. The Mirror reports that the total taken from retirees in error could have reached £43.5million last year alone.

HMRC acknowledged the mistake after Conservative MP Richard Holden raised it, and it has apologised to those affected. The Mirror says the tax authority was understood to be aiming to fix the problem this summer. The Shadow Chancellor and a former pensions minister have both asked why it was allowed to happen at all.

For each pensioner the sums are small. The Mirror reports that campaigners say the principle still matters, because millions of people may have had their pension income wrongly recorded by the body that sets their tax bill.

How the triple lock rise tripped up HMRC's sums

The problem lies in how HMRC works out the taxable value of the state pension after each annual rise under the triple lock. According to the Mirror, official rules say a pensioner's tax should be based on 51 weeks at the current year's rate and one week at the previous year's rate. This reflects the way payments fall around the start of the tax year.

Instead, the Mirror reports, HMRC has been using figures supplied by the Department for Work and Pensions that assume a full 52 weeks at the new, higher rate. That overstates pension income on HMRC's records, so tax bills come out higher than they should. For the 2025-26 tax year, the full new state pension rose from £221.20 a week to £230.25, and that difference meant pension income was recorded as £9.05 higher than it should have been.

An HMRC spokesman said: "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." Former pensions minister Sir Steve Webb was less forgiving. He called it "remarkably careless", saying most people have no idea of the rules on taxing the state pension but would hope HMRC "would know and apply the rules correctly".

Which pensioners have been overcharged

The error affects pensioners who pay income tax, and the Mirror puts the number who may have been caught up at as many as 8.7 million. Income tax is only due on income above your Personal Allowance, which GOV.UK sets at £12,570 as standard. Pensioners whose total income stays below that level would not normally pay income tax on their pension in the first place.

HMRC says the difference in tax owed is around £5 in most cases, and the Mirror gives the same figure for the average overpayment. That will not change anyone's life, but spread across millions of people the paper says the total runs to tens of millions of pounds. Sir Steve Webb said it was "quite shocking" that so little care seemed to have been taken to get it right in the first place.

The figures published so far are based on the full new state pension rate. The reports do not say how the error affects people on the older basic State Pension, or anyone whose overpayment is bigger than the typical amount.

Key numbers

• 8.7 million: the most pensioners who pay income tax that the Mirror says may have been affected.
• £5: the typical difference in tax owed, according to HMRC.
• £43.5million: the extra tax the Mirror says HMRC may have collected from retirees last year alone.
• £230.25: the full new state pension per week in 2025-26, up from £221.20.
• £9.05: how much higher than it should have been pension income was recorded, according to the Mirror.
• 51 weeks: the period that should be taxed at the current year's rate, with one week at the old rate.
• 52 weeks: what the DWP figures used by HMRC wrongly assumed was paid at the higher rate.

When HMRC says it will put things right

HMRC was understood to be aiming to resolve the problem this summer, according to the Mirror. The reports do not say whether that has happened, how any refunds will be paid, or whether pensioners will need to do anything to get their money back.

Questions about the delay are also growing. The Sunday Times reported that HMRC was first alerted to the issue in August last year but did not tell the DWP until October. Shadow Chancellor Sir Mel Stride said "questions need to be answered and the matter must be urgently put right", adding that ministers needed to find out what happened and stop similar errors happening again. The row adds to long-running criticism of HMRC, with MPs having previously accused it of "damaging trust in the tax system" over long waiting times and difficulties reaching advisers.

What you can do now

If you get the state pension and pay income tax, it is worth looking at how HMRC has worked out what you owe. The HMRC app lets you manage your details, taxes and benefits, and is a sensible place to start checking the information HMRC holds about you.

Keep your state pension letters and any statements from private or workplace pensions together, so you can compare the pension income HMRC has used with what you were actually paid. If you think too much tax has been taken, contact HMRC directly and keep a note of when you called and who you spoke to. GOV.UK says its online Income Tax estimate tool cannot give an estimate if your only income is from state benefits such as the State Pension.

You can check the standard Personal Allowance and the tax bands on GOV.UK's Income Tax rates and Personal Allowances page. The current tax year runs from 6 April 2026 to 5 April 2027, and the standard Personal Allowance is £12,570.

Your questions answered

Will I get my money back automatically?

HMRC says it is working to fix the issue, and the Mirror reported it was aiming to resolve it this summer. Whether refunds will be paid automatically, and how, has not been published yet.

How much have I overpaid?

HMRC says the difference in tax owed is around £5 in most cases. The Mirror links the error to the 2025-26 rise in the full new state pension, which led to pension income being recorded as £9.05 higher than it should have been.

Why was the mistake not spotted sooner?

That is what critics are asking. The Sunday Times reported that HMRC was first alerted in August last year but did not inform the DWP until October. HMRC only acknowledged the problem after Richard Holden raised it.