Eight million state pensioners have been sent bills by HMRC after being overcharged, despite the Labour government being aware of the issue for over a year. The party has faced accusations of knowing retirees were being overtaxed on their Department for Work and Pensions (DWP) state pension without taking corrective action.
Minister Confirms Knowledge Since June 2025
Torsten Bell, the pensions minister and Labour cabinet member, has confirmed that the government was aware of the calculation error since at least June last year. He stated: "We have become aware that for a small sub-set of customers in receipt of the state pension, [there has been] a calculation error."
Tax Columnist Highlights HMRC's Mistake
Mike Warburton, tax columnist for The Telegraph, revealed in May that HMRC had been charging pensioners for 52 weeks at the higher rate. He commented: "We have two government departments at odds with each other and potentially the whole pensioner population being overcharged. They've taxed pensioners more than they say the law requires, so it's to the taxpayer's disadvantage. I think HMRC have got themselves into a big hole."
Pensioner's Experience
One pensioner who alerted Mr Bell told The Telegraph: "We have corrected the pre-populated amounts each year, but it's unsettling to reduce a pre-populated amount and then justify why you are doing that year on year."
Tax Expert Warns of Impact
Robert Salter of tax firm Blick Rothenberg noted: "You're going to assume it's correct. Let's be honest, almost nobody is going to double check that. The bigger issue is that especially for people on relatively low incomes, this tax matters. It's money you could have spent that HMRC haven't legally got the right to have."
HMRC Apologises
An HMRC spokesman said: "We apologise to those affected by this error and are working at pace to fix the issue, although the impact is small with the difference in tax owed being around £5 in most cases."
