More than 3.2 million Brits warned over DWP tax error – are you owed a refund?
HMRC has confirmed it is "taxing action" to address Department for Work and Pensions ( DWP ) state pension taxation errors. The Labour government's tax authority is working to resolve an issue affecting the State Pension amounts used in certain tax calculations. The tax body has admitted that an incorrect figure was applied in end-of-year PAYE reconciliations. In its annual report, HMRC acknowledged that since 2010 to 2011, the error had affected Self Assessment pre-population.
The problem stretches back to 2015 to 2016, and Simple Assessment since 2016 to 2017. The blunder resulted in a discrepancy between the correct State Pension figure for tax purposes and the figure actually used in the calculation, the tax authority confirmed. Where an overcharge has occurred, it reflects the marginal rate of tax on the difference between one week of State Pension at the previous and uprated rates, HMRC explained. HMRC estimates that around 1.4 million PAYE customers were overcharged on tax, along with up to 955,000 Self Assessment customers and approximately 760,000 Simple Assessment customers - totalling a whopping 3.2 million people affected across the UK.
These state pensioners received an inaccurate State Pension figure and may therefore have paid more tax than necessary, the tax authority has confirmed, reports Yorkshire Live . The HMRC report reveals that the average loss per tax year since 2021 to 2022 for a basic rate taxpayer is estimated at £1.76 for those on the full basic State Pension, and £2.30 for those on the full new State Pension. The problem was initially highlighted by national newspapers.
Antonia Stokes, from the Low Incomes Tax Reform Group, said: "It is disappointing that HMRC data constraints prevent automated repayments further back, but it is positive that taxpayers can take steps to rectify earlier years if they identify they have been overcharged. "HMRC should ensure they make this process as easy as possible and that they draw attention to its existence so that people can check entitlement for earlier years." John-Paul Marks, HMRC's chief executive, said: "If customers believe they were affected in earlier years and have the necessary evidence, they can ask HMRC to review their position.
These requests will be considered on a case-by-case basis." HMRC will proactively identify affected cases and make corrections through PAYE coding adjustments, credits to Self Assessment accounts or, where required, alternative methods such as payable orders.
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