Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether her Department has made an estimate of the number of state pensioners that have had their taxable pension income miscalculated due to HMRC applying 52 weeks of the uprated rate rather than accounting for the weeks paid at the previous year’s rate.

The Government is committed to making sure older people can live with the dignity and respect they deserve in retirement. The State Pension is the foundation of the support available to them. Over the course of this Parliament, the yearly amount of the full new State Pension is currently projected to go up by around £1,900 based on the Office for Budget Responsibility's latest forecast.

In line with the Government's commitment to the Triple Lock for the duration of this parliament, over 12 million pensioners have benefitted from a 4.1 per cent increase to their basic or new State Pension this year. Those on a full new State Pension will be getting an additional £470 a year. The extra income comes on top of a substantial increase in 2024/25, which saw those receiving a full new State Pension get a £900 boost.

When it comes to taxes, social security benefits are treated differently depending on why they are paid. Generally, benefits that replace income, like the State Pension, are taxable. The Personal Allowance - the amount an individual can earn before paying tax - will continue to exceed the basic and full new State Pension in 2025/26. This means pensioners whose sole income is the full new State Pension or basic State Pension without any increments will not pay any income tax.

Most pensioners who pay tax on their State Pension are in Pay As You Earn. For these customers, HMRC calculates how much State Pension an individual accrues each year by calculating one week at the old rate of State Pension and 51 weeks at the new rate and adjusting their tax code accordingly. This means most pensioners pay the right amount of tax in real time.

HMRC has become aware that for a sub-set of individuals in receipt of the State Pension, a calculation error means that their tax is calculated based on 52 weeks at the new rate. The difference in tax owed is approximately £5. Affected individuals can call HMRC to amend any incorrect figures of State Pension.