HMRC State Pension Tax Error Affects 8.7 Million, June 18

By Huzaifa Zahoor

June 18, 2026

08:51 AM

3 min read

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Key Points

HMRC overcharged 8.7 million state pensioners approximately £5 each.

Error totalled £43.5 million in excess tax collected over 10 months.

Affected pensioners received state pension while paying income tax via PAYE or self-assessment.

Refunds expected by summer 2026 as HMRC identifies and reimburses affected individuals.

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HMRC has admitted a tax calculation error that overcharged approximately 8.7 million state pensioners. Each affected person paid roughly £5 more than they should have, totalling £43.5 million in excess tax collected. The error went undetected for 10 months before being flagged in August 2025. HMRC is now working to identify those affected and issue refunds by summer 2026.

Who Was Affected by the Error

The error impacted state pensioners who continued to pay income tax through self-assessment or PAYE employment. State pension is taxable income, but HMRC’s calculation failed to properly account for this in certain cases. HMRC is currently pinpointing exactly which individuals were overcharged and has not yet begun issuing refunds.

How the Mistake Was Discovered

MP Richard Holden flagged the error in August 2025, but it was not brought to the Department for Work and Pensions until October. The error went undetected for around 10 months before official action began. HMRC has since apologised and committed to resolving the issue at pace.

What Happens Next

HMRC expects to complete the identification process and begin issuing refunds by summer 2026. An HMRC spokesperson said the department apologises to those affected and is working to fix the issue. The shadow chancellor has called on HMRC to disclose the full extent of those impacted and actively reimburse overcharged pensioners without delay.

Understanding Your Tax Code

State pension is a taxable source of income. Pensioners who remain in employment or have other income sources may receive tax code adjustments through PAYE. If you receive a letter from HMRC about a tax bill or code change, you should check it carefully and contact HMRC if the figures appear incorrect.

Final Thoughts

HMRC overcharged 8.7 million state pensioners by approximately £5 each due to a calculation error. Refunds are expected by summer 2026, but affected individuals should verify their tax records now.

FAQs

How much was I overcharged by HMRC?

Most affected pensioners were overcharged approximately £5, though the exact amount varies based on individual income and tax circumstances.

How do I know if I was affected by the HMRC error?

You were likely affected if you received state pension and paid income tax via PAYE or self-assessment during the error period. HMRC is identifying affected individuals.

When will I get my refund?

HMRC expects to issue refunds by summer 2026 after identifying all affected pensioners and processing payments.

Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.

About Author

Huzaifa Zahoor

Co Founder

Huzaifa Zahoor is the engineer who built Meyka. He has spent years writing Python, training AI models, and building data pipelines specifically for financial markets. His technical articles have reached over 30,000 readers on Medium, so he knows how to make complex things easy to follow. If this article touches on how the tools work, he is the person who actually built them.