HMRC to contact pensioners over its underpayment error

UP TO 146,000 pensioners will be contacted by HM Revenue & Customs this week to be told they owe tax.

The underpayments for the 2010/11 tax year were announced earlier this year. The errors came about after HMRC failed to take into adjust the taxpayers' tax codes to take into account their state pension. The pensioners in question exceeded their personal allowance but, because of the error, tax was not deducted from the state pension as it should have been.

A spokesperson for HMRC told Which magazine: 'Where a pensioner has underpaid tax for 2010-11, we will automatically code out that underpayment over a period of three years from April 2012 without them needing to contact us.

'We will also write to these customers to apologise, explain why the underpayment happened and how we will collect it'.

Last year, following similar errors, the taxman wrote off many of the underpayments under Extra Statutory Concession A19. However, unlike last year, HMRC is unable to write off the payments because ESC A19 only allows for this when the arrears are less than one year old.

The underpayments will be taken automatically through PAYE on the taxpayers' state pensions.