HMRC has overtaxed pensioners in Britain for at least 10 years, it has been revealed.
Millions of Britons who receive the state pension have been routinely overcharged by the Government, with no action taken to rectify the situation.
The problem arose due to an error in how tax is calculated.
HMRC first became aware of the mistake two years ago but failed to inform the public. Only when the media discovered the problem did the revenue service admit it had been overcharging as many as 8.7 million pensioners.
Now, it has emerged that the calculation issue has been going on since at least 2016.
HMRC said: “We apologise to those affected by this error and are working at pace to fix the issue, although the impact is small with the difference in tax owed being around £5 in most cases.”
The error occurred due to HMRC failing to take into account the rise in the state pension each year.
Under a policy called the triple lock, the state pension rises each April by the highest out of inflation, average earnings, or 2.5 per cent.
Each year HMRC has calculated how much tax pensioners owed based on the new, increased state pension amount.
However, for one week of the tax year, pensioners still receive the lower rate of payments.
Those who think they may have been impacted by the overtaxation can contact HMRC directly.
Taxpayers can call on weekdays between 8am and 6pm via 0300 200 3300.
HMRC says the average wait time for callers to the helpline is just over 13 minutes, and that satisfaction with the service provided stands at about 80 per cent.
Sir Mel Stride, the shadow chancellor, has demanded urgent action to set out a solution to the mistake.
“It’s extremely concerning that HMRC appear to have overcharged pensioners by more than £300 million.
“Just as troubling is the apparent failure to take the necessary steps to put this right immediately,” he said.
“Ministers must intervene and establish what has gone so wrong here, and how HMRC intend to put it right.”
Meanwhile, former pensions minister Baroness Ros Altmann said: “This highlights how crazily complicated the state pension is and how the administration and calculations for pensions prove beyond even the government’s capability.
“Pensioners are not tax experts and just trust that they are being told to pay the right amounts.
“It is important that lessons are learned from this debacle so that this doesn’t happen again.”
HMRC has said that it hopes to fix the issue by the end of this summer.
