On 16 April, Royal London discovered an HMRC calculator that allowed users to check how much money they could put into their pension was giving incorrect figures.
When Royal London raised the issue with HMRC on Monday, the Revenue said it had been aware of the issue since 6 April 2018.
No warning
Despite acknowledging the problem, HMRC left the calculator on its website with no warnings it could be giving users incorrect data. This prompted Royal London’s director of policy, Steve Webb, to make a public statement urging it to be taken down on Wednesday morning.
Shortly after Webb’s statement was released, HMRC removed the calculator from its website.
Webb, who was formerly UK minister of pensions, said while he welcomed that HMRC had finally taken down the tool, it was “totally unacceptable” that they knew the site was wrong but continued to display incorrect information with no warnings.
“A similar issue arose last year when HMRC kept up an incorrect site for over two months.
“HMRC needs to check these sites much more thoroughly before they go live and needs to be much more responsive when they find out that things are wrong.
“There is a real risk that taxpayers will have made financial decisions on the basis of an HMRC website which HMRC knew to be giving incorrect information. This is totally unacceptable,” Webb said.
Incorrect calculations
Under current HMRC rules, most taxpayers pension contributions up to £40,000 ($57,279, €46,292) 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.
The HMRC calculator was getting this calculation wrong in some cases for both 2016/17 and 2018/19.
Royal London said this could lead to individuals wrongly believing that they should stop saving into a pension because they had exceeded their annual limit.
Webb said 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.
In HMRC’s response to Royal London, it said it was working to fix the issue “as soon as possible”.
