18 April 2018

HMRC urged to take down pension tax website which gives taxpayers the wrong answer

4 min read

 
Steve Webb - Director of Policy

Steve Webb

Director of Policy, Royal London

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HMRC has been urged to take down a web page which allows users to check how much money they can put into a pension after blunders were spotted by tax experts at Royal London. HMRC has admitted in writing that the site is giving incorrect figures, but it continues to be in use and contains no warning that the figures may be wrong.

Under current rules, for most taxpayers pension contributions of up to £40,000 per year qualify for tax relief. But since 2016/17, higher earners have faced a reduced allowance which can fall to as little as £10,000 per year for those on the highest incomes. The impact of this change is reduced by the ability of taxpayers to ‘carry forward’ unused annual allowances from up to three years earlier. Unfortunately, the HMRC website is getting this calculation wrong in some cases for both 2017/18 and 2018/19. This could lead to individuals wrongly believing that they should stop saving into a pension because they have exceeded their annual limit. One Royal London customer who used the site was told that he was limited to £10,000 in pension contributions for 2018/19 when the correct figure was around £35,000.

HMRC have admitted that the website is incorrect, but have not taken it down and have not put any warning notice to those using the site that it may give incorrect information. When Royal London raised the issue with HMRC on Monday (16th April), they said: ‘We are aware that since 6 April 2018 the Annual Allowance calculator is showing less annual allowance than is due for the year 2017-18 onwards, and we apologise to customers for this. We’re working to fix this issue as soon as possible’.

However, Royal London’s Director of Policy Steve Webb is calling for more urgent action. He said:

"It is totally unacceptable for an official government website to continue to operate when it contains blunders of this sort. Now that HMRC knows that there is a problem they should take down the site immediately. It is beyond belief that they are knowingly allowing taxpayers to get incorrect information from their website and potentially to make major financial decisions on the strength of dodgy data. In the past it has taken months to fix issues like this – how many more people have to be misled before HMRC takes action?"

Last year, HMRC admitted that there has a different problem with the same website. In its September 2017 Pension Schemes Newsletter they admitted ‘an error in carrying forward unused allowance from 2012-13’ but it was not until the November 2017 newsletter that they said the problem ‘had been fixed’. In the interim period the website continued to provide incorrect data for some taxpayers.

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For further information please contact:

Steve Webb, Director of Policy, Royal London

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.