Published On: Sun, Apr 14th, 2024

HMRC pensioner income tax raid begins – do this now to avoid shock bill and fines | Personal Finance | Finance

In total, around nine million pensioners will pay income tax, roughly three out of four. The numbers have doubled since 2010. The tax bills will come as a shock to many, and could carry a sting in the tail, as there are fines and penalties if you miss deadlines or fail to pay.

Former Pensions Minister Ros Altmann has warned that most receiving tax bills will be totally unaware of any liability and have probably never have filled in a tax return in their life. “They are at risk of being hit with fines and penalties for not paying a tiny amount of tax that they didn’t even know about.”

HMRC does not usually tax the state pension, but it does tax any earnings on top of that. Income from employment, a defined benefit “final salary” company pension, annuity or drawdown is taxed automatically under Pay As You Earn (PAYE). 

HMRC takes your state pension into account when doing its calculations, but deducts income tax from other sources.

It does this by adjusting your Tax Code which tells employers and pension companies how much tax to deduct. Many pensioners will see their income from fall as a result, and wonder why.

One danger is that your Tax Code may be wrong, which easily happens if you have multiple sources of income or your circumstances change, said Andrew Tully, technical services director at Nucleus Financial. “Your employer or pension company can’t alter these, so you need to get in touch with HMRC.”

That’s only the first issue pensioners will have to deal with over the next few years, and many will struggle, especially older people.

Unless they act, it could weigh on their minds.

You can check your Tax Code at, while a number of websites offer free Tax Code calculators, including “You need to get it right, otherwise you risk getting a big tax demand at some point,” Tully said.

Other income is paid gross, which means you have to declare it to HMRC by completing a self-assessment tax return yourself.

The prospect will strike many with dread, and they may stick their heads in the sand rather than knuckle down to the grim task of getting their heads around HMRC systems.

So when do you have to complete a tax return? In many cases, HMRC will write to you. “But it is still your responsibility to work out if you need to do one,” Tully said.

Pensioners who are self-employed and earn more than £1,000, or have multiple sources of income, will typically have to do a return (especially if some of that income is untaxed).

If you earn income from a property that you rent out, or are a new partner in a business partnership, then again, you need to complete a return.

If you have untaxed income from savings, investments and dividends outside of a tax-free Isa, or foreign income, you need to do a return. As does anyone with total taxable income of more than £150,000 a year, or who owes capital gains tax after selling an asset.

For more information, visit

There is another trap to watch out for.

READ MORE: Pensioner tax blitz begins – see how HMRC is targeting your income

Tully said: “A number of bogus and scam websites will charge you to complete a return. Make sure you submit your return via the website. The process is free.”

Crucially, if you need to complete a tax return and have not sent one before, you must tell HMRC by October 5. You can do this online at

You have until January 31, 2025, to file your return for the 2023/24 tax year, provided you do it online (which HMRC prefers).

If you want to file a paper return, call HMRC on 0300 200 3610 to request form SA100. The deadline is three months earlier on October 31.

There is an automatic £100 fine for missing the deadline, with more penalties to follow unless you act.

Many pensioners will still not have to file a return this financial year. Unfortunately, their numbers are shrinking by the day.

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