HMRC got the tax wrong on my new State Pension

Taxedtoomuch

I'm raising this because I think it might affect everyone receiving the New State Pension for the first time.

My pension started in Jan 2023, and HMRC rightly included it in my taxable income for the year to 5 April 2023 - but I recently spotted that the figure was overstated by £450.

When I looked at it, I could see why.  HMRC included 12 weeks' worth of pension (i.e. 4 weeks of income each for January, February and March 2023).  They didn't take account of the fact that the first payment is time apportioned, to take account of the date on which your birthday actually falls.  I only received a week and a half of pension for January - as a result I've been taxed on £450 of income I never received.

I rang HMRC to explain this, and was told that they include the figure supplied to them by the Department of Work and Pensions - and I should ring them instead.

I can't work out how to get the DWP to supply the correct information to HMRC.  Worse than that, I fear everyone receiving their New State Pension for the first time will be automatically overtaxed for the same reason.

geordiejon

first thing look at your income again, as the pension is paid 13 times a year you, like me could have been paid twice in march or in early april before the 5th. all depends on your payment date.

molerat

What have they reduced your tax code from and what is it now including any suffix letters and when was the first pay day with the new code ?  You cannot really take anything at face value on the first part year of state pension, it usually works out with the correct tax being deducted although the numbers being presented do not make sense.

badmemory

You should always check the figure DWP give for state pension.  In my over 10 years they haven't got it right once so far.

Dazed_and_C0nfused

Taxedtoomuch said:

I'm raising this because I think it might affect everyone receiving the New State Pension for the first time.

My pension started in Jan 2023, and HMRC rightly included it in my taxable income for the year to 5 April 2023 - but I recently spotted that the figure was overstated by £450.

When I looked at it, I could see why.  HMRC included 12 weeks' worth of pension (i.e. 4 weeks of income each for January, February and March 2023).  They didn't take account of the fact that the first payment is time apportioned, to take account of the date on which your birthday actually falls.  I only received a week and a half of pension for January - as a result I've been taxed on £450 of income I never received.

I rang HMRC to explain this, and was told that they include the figure supplied to them by the Department of Work and Pensions - and I should ring them instead.

I can't work out how to get the DWP to supply the correct information to HMRC.  Worse than that, I fear everyone receiving their New State Pension for the first time will be automatically overtaxed for the same reason.

State Pension is taxed differently to other earnings and pension income, it's your entitlement which counts not what you were paid.

So HMRC should tax you on however many weeks you were entitled to the pension, what you were actually paid in the period to 5 April 2023 isn't relevant.

Taxedtoomuch

Thanks for the replies - much appreciated.  Gold star to Dazed_and_C0nfused - I think this is the crux of the matter

35har1old

geordiejon said:

first thing look at your income again, as the pension is paid 13 times a year you, like me could have been paid twice in march or in early april before the 5th. all depends on your payment date.

Is there a four week option opposed to monthly?

luvchocolate

35har1old said:

geordiejon said:

first thing look at your income again, as the pension is paid 13 times a year you, like me could have been paid twice in march or in early april before the 5th. all depends on your payment date.

Is there a four week option opposed to monthly?

State pension is paid 4 weekly never monthly. 
However you can request it to be paid weekly or fortnightly