Inherent annual incorrect reporting of State Pension by DWP to HMRC

plc1954

@Dazed_and_C0nfused

So it seems that HMRC are willing to recalculate based on the correct State Pension received during a tax year when advised by the pensioner.
If DWP just gave the correct amount to HMRC in the first place it would save a lot of time and effort by pensioners trying to reconcile income and tax (before this discrepancy is understood) and HMRC fielding calls about it.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81949230#Comment_81949230

HMRC should never be taxing people on the basis of the State Pension someone receives.

It is the State Pension amount the person is entitled to that determines how much should be being taxed.

molerat

https://forums.moneysavingexpert.com/discussion/comment/81949221#Comment_81949221

Nope, post 2016 pensioner paid 4 weekly and get a letter that simply states the new weekly amount. MrsM gets a letter stating the first and subsequent 4 weekly payments with no mention of the actual weekly amount.

jem16

https://forums.moneysavingexpert.com/discussion/comment/81948132#Comment_81948132

Not really.

Every year my tax code is calculated correctly on the accruals basis - ie 1 week of old and 51 weeks of new.

When it comes time for my tax return, the state pension figure pre-populated is 52 weeks of new even when it’s an 53 week tax year. Every year I correct it and tell them why.

So if they can get it right for the tax code why can’t they get it right for the tax return?

LHW99

https://forums.moneysavingexpert.com/discussion/comment/81949241#Comment_81949241

My SP began in August a few years back. However it appeared that HMRC were told "my entitlement" as the annual pension for that particular tax year. There was rather a big difference! (I wrote and got it changed)

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81950089#Comment_81950089

I'm pretty sure DWP only ever tell HMRC about the weekly rate.

But for the first year you start to get State Pension HMRC often include the annualised amount in the new tax code but then issue that new code on a non-cumulative basis.

Which is confusing but means the correct tax is normally deducted each time your employer or pension payer operates the new code.

Then when HMRC do their annual end of tax year review they only include the weekly rate multiplied by the number of complete weeks of entitlement in that tax year.

It generally works quite well and has done for many many years. And generally doesn't result in too much or too little tax being deducted in respect of the State Pension.

But people not understanding that and trying to interfere unnecessarily seems quite a common thing.

badmemory

They may well have changed how they do things in recent years. When I first started my state pension & was filing self assessment it was populated with 52 weeks worth even though the amount received was for many weeks less.

LHW99

https://forums.moneysavingexpert.com/discussion/comment/81950246#Comment_81950246

Yes, that was what they had done. When I tried to change the pre-populated figures the page refreshed and put the 52 week figure back, hence sending a letter. As I said it was some years ago now.

badmemory

I have always found that the basic lesson with dealing with HMRC is work your own figures out first & then find out why you disagree.

plc1954

This issue has now been written about in Which? magazine:

https://www.which.co.uk/news/article/are-you-paying-the-right-amount-of-tax-on-your-state-pension-an1Eu1l3CPmH?utm_source=ExactTarget&utm_medium=Email&utm_campaign=4694108-M_MW_EM__20260601&mi_u=225580710&mi_ecmp=M_MW_EM__20260601