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30 Mar 2011
PROBLEMS WITH HM Revenue & Customs' PAYE system mean that some pensioners will have to pay back tax owed.
People who started receiving their state pension in 2010/2011 have not had the new pension included in their PAYE codes because of faults with the National Insurance and PAYE Service (NPS) computer. This has meant that some pensioners have underpaid tax. HMRC has said that it has no power to write this off as it is has happened in this tax year, meaning that the affected taxpayers will have to pay the money back.
Further reading
The ICAEW has said that where the tax paid is under £2,000, they will be coded out in future years' PAYE codes. Where the money owed is more than £2,000, HMRC has said it is prepared to allow taxpayers to code this out over three years.
This is the third year in a row these errors have occurred, but HMRC had agreed to write off tax underpayments in previous years.
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