HMRC apologises over tax calculator error

HM Revenue & Customs (HMRC) has issued a public apology over a faulty tax calculator which was providing users of its website with erroneous information regarding their pension allowances.
The apology comes after former pensions minister Steve Webb flagged up inconsistencies with the Revenue’s “dodgy” pension calculator tool earlier this week, claiming that its miscalculations could have cost taxpayers thousands of pounds worth of pension tax relief.
According to Mr Webb, the calculator, which has only very recently been removed from HMRC’s website, was consistently overlooking the fact that taxpayers who have not used up their annual pension contribution allowance can carry over the allowance for three years, thus enabling them to save much more money into their pensions.
The current rules enable basic rate taxpayers to contribute £40,000 a year into their pension and qualify for tax relief at their marginal income tax rate on any contributions made.
However, the introduction of a tapered allowance in 2016/17 provides higher earners with a significantly reduced annual allowance which, for some taxpayers, sits at just £10,000.
Due to the errors in HMRC’s online tool, many higher earners relying on it would have stopped saving into their pension when they didn’t need to, Mr Webb has said.
“It’s beyond belief that [HMRC] is knowingly allowing taxpayers to get incorrect information from their website and potentially to make major financial decisions on the strength of dodgy data,” he said earlier this week.
In response, HMRC removed the tool from its website on Wednesday 18 April 2018.
A spokesman 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.”

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