HMRC to issue refunds to over three million pensioners after tax miscalculation

HMRC identified a miscalculation that taxed state pensioners as if they received the new, higher rate for all 52 weeks, rather than the correct mix of one week at the previous rate and 51 weeks at the new rate. As a result, about 3.2 million pensioners are set to receive refunds totaling an estimated £19.3 million, with an average of around £6 per individual, though exact figures will vary. The agency will process repayments automatically through existing payroll systems, self-assessment adjustments, or other suitable channels for affected tax years from 2020/21 onward.

Individuals believing they were impacted in earlier years may apply for a review, provided they can supply appropriate evidence, but HMRC lacks sufficient data to issue automatic refunds for those periods. HMRC permanent secretary John-Paul Marks expressed regret over the error and indicated an internal audit will be completed to prevent future occurrences.