Taxman apologises for pensions blunder as HMRC forced to remove relief calculator from website


​Pension experts slam HM Revenue & Customs (HMRC) for failing to take down flawed tax relief calculator, despite knowing it was providing incorrect advice.

Top-rate taxpayers could have lost out on thousands of pounds of tax relief when planning their financial affairs for the coming year by using an online tool to help in one of the most complicated areas of personal taxation.

HMRC have apologised and admitted to the website errors.

However, despite taking the calculator down late last night, it is understood that officials have been aware of the shortcomings for almost two weeks.

The current 2018/19 tax year presents the final opportunity for top earners to take advantage of a £40,000 pension allowance carried forward from 2015/16. Taxpayers can utilise their allowance from each of the previous three tax years in order to earn tax relief.

So-called “tapered annual allowance” was introduced in April 2016, limiting relief afforded to top-rate earners (people with an annual income over £150,000) to contributions as low as £10,000.

If top earners did not use their full £40,000 allowance in 2015/16, the rules allow it to be carried forward and utilised in 2018/19. HMRC’s calculator told users they could not carry such a tax shield into the current year.

Former pensions minister Sir Steve Webb said: “It is totally unacceptable for an official government website to continue to operate when it contains blunders of this sort.”

“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,” said Webb, who now works at Royal London.

Charlie Musson from pension provider AJ Bell called taper relief “one of the single most complicated aspects of the pension system”.

“If the HMRC website can’t get the answer right it says it all really – most high earners will have no chance of working out how much they can put in their pension.”

He said: “Mistakes like this undermine its legitimacy; the fact they knew the calculator was wrong and still left it up, opens it to accusations it was deliberately seeking to mislead investors to reduce the amount of pension tax relief it has to pay out.”

A spokesperson for HMRC said: “We are sorry that the calculator isn’t working as it should in some cases. The calculator is no longer available as it is being updated.”