The ICAEW reports that HMRC have made a wee bit of a cock up (again) with the codings for people who started receiving the state pension in 2010/11.
It seems that the new pension has not been included in their tax codes.
The normal procedure is for the DWP to tell HMRC when it starts to pay a state pension, so that HMRC can put it in the pensioner's tax code.
Where this has not been done properly for 2010/11, the state pension will not have been taxed and those affected will have underpaid tax.
Those affected should be informed by HMRC via a P800.
HMRC has said that the A19 concession is not applicable this time, because the underpayments are for current tax. However, do bear in mind that they tried to claim that A19 was not applicable for earlier tax underpayments when in fact it was.
Underpayments of less that £2K will be coded out in future years' PAYE codes. HMRC should contact those with underpayments of more than £2K, and give them 3 years to have the underpayment "coded out".
However, just in case there is a cock up wrt communications here are two helplines for contacting HMRC:
- Taxpayers 0845 300 0627
- Agents 0845 366 7855
As to why this cock up has happened again is not clear. Maybe the communications between DWP and HMRC are not as watertight as they used to be?
Tax does have to be taxing.
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