Sunita Somvanshi
If you receive the State Pension and pay income tax, HMRC may have used an incorrect taxable State Pension figure in a PAYE, Self Assessment or Simple Assessment calculation. The question most affected people are asking is straightforward: do I need to do anything, or will the money come automatically?
HMRC estimates that approximately 3.2 million customers will receive repayments totalling around £19.3 million. HMRC chief executive John-Paul Marks wrote to the chair of the Public Accounts Committee to acknowledge the error and apologise. A system fix was implemented on 25 August 2026 for PAYE and Simple Assessment customers. Repayments are expected to complete during the 2026–27 financial year.
If you receive the State Pension and believe your income tax calculation may be incorrect, check any letters or notices from HMRC. Most customers identified as affected from 2020–21 onward should not need to submit a claim — HMRC says corrections will be made through PAYE coding adjustments, Self Assessment credits or other payment methods where necessary.
The tax error relates to how HMRC calculated the annual taxable State Pension figure. The correct figure should reflect one week at the previous rate and 51 weeks at the current rate, but HMRC’s system used 52 weeks at the current rate. This affected calculations across PAYE, Self Assessment and Simple Assessment.
How the State Pension Calculation Error Occurred
The error arose in HMRC’s treatment of the State Pension annual rate change. When the State Pension rate increases each April, the correct taxable amount for that year should be calculated as one week at the previous year’s rate plus 51 weeks at the new rate. HMRC’s automated systems instead applied 52 weeks at the new rate, resulting in an overstated taxable income figure for affected pensioners.
Pensioners affected by the calculation will be corrected through their tax accounts where HMRC holds sufficient information. For those requiring a payable order or other payment method, HMRC’s letter to the Public Accounts Committee confirms that payment arrangements will be made.
There is also an outstanding question about earlier tax years. Automatic corrections cover the period from 2020–21 onwards. Pensioners who believe they were overtaxed before 2020–21 must contact HMRC with supporting evidence and will be assessed individually. HMRC has not offered automatic refunds for those years.
Will I get the HMRC pension tax refund automatically?
Most customers identified as affected from 2020–21 onward should not need to submit a claim. HMRC says corrections will be made through PAYE coding adjustments, Self Assessment credits or other payment methods where necessary. For anything before 2020–21, you must contact HMRC directly with evidence of the overpayment.
HMRC will correct the affected calculations for customers identified in the review. Check your online tax account or watch for an HMRC letter in the coming weeks.
