HM Revenue and Customs apologized on July 9, 2026, after a system calculation error stretching back more than 15 years caused millions of UK state pensioners to pay excessive income tax.
The technical mistake affected up to 3.1 million retirees who earn enough to owe income tax during the 2024-25 tax year alone.
Of these, 1.4 million were overtaxed through PAYE and 1.7 million via self-assessment and simple assessment methods.
The issue originated from a 2010 PAYE system modification that applied 52 weeks of higher rates instead of accounting for a brief one-week gap during annual triple lock pension increases.
This generated around £18 million for the authority since 2021.
HMRC Chief Executive Apologizes
“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,” said John-Paul Marks, Chief Executive of HMRC.
Marks stated that the tax authority is developing a fix for this summer to correct future calculations.
He noted that the delay since discovering the issue in 2019 stemmed from data integration difficulties.
“The complexity of the interaction between the Department for Work and Pensions (DWP) state pension data, PAYE end-of-year reconciliation, simple assessment and self-assessment pre-population means that developing a solution has taken until now, and I apologise that this was not completed sooner,” Marks said.
Concurrently, the Department for Work and Pensions announced it closed its five-year Legal Entitlement and Administrative Practice correction exercise on March 31, 2026.
The DWP utilized its remaining £92.4 million provision to fix historic underpayments.
However, the DWP and HMRC continue separate remediation work for missing Home Responsibilities Protection credits.
These credits account for £6 in every £10 underpaid and led to £7 million in arrears paid to over 800 pensioners between April 2025 and March 2026.
“Some people have not had all eligible years of HRP recorded on their National Insurance records and so have an incomplete record affecting their State Pension entitlement,” said the DWP.
The DWP still maintains a £22 million provision for future HRP payments and continues to review cases through fraud and error sampling.
