HM Revenue and Customs (HMRC) has announced it will issue refunds to 3.2 million state pensioners who were overtaxed on payments from the Department for Work and Pensions (DWP). The overcharging occurred during 2020 and 2021, resulting in a notable error amounting to £19 million.
Pensioners will receive tax rebates averaging around £6 each. For those receiving the full basic state pension, the average refund per year will be approximately £1.76, while those on the new full state pension can expect around £2.30 per year.
John-Paul Marks, HMRC’s Chief Executive, stated: “If customers believe they were affected in earlier years and have the necessary evidence, they can ask HMRC to review their position. These requests will be considered on a case-by-case basis.” He further explained that automatic repayments will only cover cases dating back to April 2020, as this is the limit for reliable data identification and correction.
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Mr Marks apologised for the error, acknowledging its impact on those affected, and confirmed that an internal audit review is underway to learn lessons and prevent future mistakes.
Tax columnist Mike Warburton criticised the situation, saying: “It’s disgraceful for taxpayers to be expected to go through records to make a claim when HMRC should have these records themselves.”
Meanwhile, Antonia Stokes of the Low Incomes Tax Reform Group expressed disappointment that data limitations prevent automated repayments for earlier years, but welcomed the option for taxpayers to correct past overcharges. She urged HMRC to ensure this process is straightforward and widely communicated so individuals can check their entitlements.