DWP pension advice to HMRC leads to wrong tax code

HugoFS

I retired in 2023 and began to draw a private and state pensions late in 2024-25.  The aggregate gross income from both these pensions came to under £11K and I had no other income for the year.  When I began to draw the state pension in Dec 24, DWP advised HMRC my annual income entitlement, although I would only draw 4 payments out of 13 in the financial year.  HMRC therefore advised a tax code to my private pension provider to begin taking tax, on the assumption that I would receive an entire year's state pension within the financial year.

I waited until now to contact HMRC, in the expectation of receiving a P800 letter advising a tax refund to be due.  When none came, I called them today.  The HMRC agent was insistent that the tax taken was correct, and there was nothing to be done.  He did not accept that I should not be paying any tax at all on a combined income of less than the basic rate threshold, with no other complications.  He simply repeated that the tax code could not be incorrect as it was based on DWP advice and there is no process to review and amend it based on reality.

I have requested an escalation, but where do I go from here?  What is the correct route?  Should DWP have advised the actual income and not the annualised entitlement?  Do I need to get them to correct their mistake?  Or should HMRC look more closely at my actual income and ignore the DWP figure? 

Isthisforreal99

You need to understand the difference between a cumulative and non-cumulative tax code. A non-cumulative tax code with the annual amount of state pension does not mean you have paid tax on the annual amount. 

What was your actual state pension entitlement and how much was your private pension and how much tax did you pay.

HugoFS

First time I've heard that nomenclature but it sounds meaningful, thank you.  However, the second part of your comment is key:

DWP pension entitlement        £12972 (annual)
DWP pension received            £ 4358   (actual)
Private pension (gross)           £ 6385
Total income (gross)               £10743
Tax deducted                          £   849