Pensioners sent wrong tax codes

Thousands of pensioners may have been sent the wrong tax code following the introduction of a new computer system at HM Revenue & Customs.

Some individuals who started to claim their state pension during the 2009/10 tax year have been given the wrong code meaning they could pay too little or too much tax, the HMRC has warned.

This is also affecting married couples and civil partners aged 76 and over who could lose their married couples allowance, which was worth up to £6,965 during the current tax year.

The problem has been caused by the introduction of a new computer system, which combines information on people’s National Insurance contributions and the Pay As You Earn scheme for the first time.

In some cases, the system has not been able to sort through and separate information on people leaving jobs, meaning those who have stopped working and started drawing a pension are being treated as if they have two income streams. The problems are also affecting people with more than one job, or those who have changed jobs in the past few years.

The Low Incomes Tax Reform Group said: ”Like many new computer systems, the information going in has produced unexpected errors coming out and although HMRC are battling hard to resolve them, they will not totally succeed before tax codes are issued, or even before tax starts to be deducted in April. So out of the millions of pensioner tax codes going out over the next few weeks, a significant number will be incorrect.”

An HMRC spokesman said: ”This is a known issue and we have included it in the “agents Issues” on the HMRC website and are working on a fix so that nobody will lose out.

”We accept and very much regret that errors have occurred in some of the notices that have issued but the majority of codes are right. We recognise that some of the data brought forward from previous systems may be inaccurate and we are taking every opportunity to correct that.

“If any customer has concerns about the accuracy of their coding notice they should contact us so that we can review and correct as necessary.”