PAYE codes missed out pensions. (Full Article)
HMRC was caught up in another weekend avalanche of bad publicity as a result of PAYE codes that negelected to include allowances for people who started to receive pension payments during the past year.
In what BBC Radio 4’s Moneybox described as HMRC’s “latest tax bungle”, the department failed to take account of the state pension when it sent out tax codes to people who first drew their pension this year. As a result, it will send demands for underpaid tax to nearly 150,000 pensioners.
The same mistake happened in the two previous tax years, but was only picked up as reconciliations were finally made within the new National insurance and PAYE Services (NPS) computer system. Many of those previously affected have had their underpayments waived as a result of extra statutory concessions, but because this mistake was discovered in-year, the department said it had no power to write the payments off.
Instead, affected taxpayers will be given three years in which to settle the outstanding sums.
