NAO reveals pensions overpaying £250m in tax

| October 23, 2009 | 0 Comments
NAO reveals pensions overpaying £250m in tax

A report by the National Audit Office (NAO) has revealed that around 1.5 million pensioners have made overpayments in income tax due to processing errors.

Furthermore, the NAO revealed that around 3.2 million were neglecting to take up their allowance entitlements.

The watchdog also estimated that half a million pensions have underpaid tax, by an average £207.

According to the NAO, the errors occurred because the tax situation for pensioners was too complex and HM Revenue and Customs have struggled to cope.

In response, the Revenue said there are plans to reduce the number of mistakes. It said: “We are determined to reduce over and underpayments.”

“During the last few months we have significantly upgraded our computer systems to improve accuracy and deliver a better service to older taxpayers,” it added.

As a result, HMRC is to launch a publicity campaign to encourage pensioners to reclaim tax and have their investment income paid tax-free.

Amyas Morse of the NAO said: “Older people want to pay the right amount of tax, but too many pay more than they need to because they do not claim allowances to which they are entitled and because of errors.”

“By providing a more coherent service, HMRC could make substantial savings as the number of enquiries from older people about their tax affairs would reduce - a win-win situation for all.”

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