What the HMRC warning for over-65s means
HMRC has issued a warning for over-65s about changes that could lead to new charges of up to £2,500 from 2026. This article explains what to look for, who may be affected and what practical steps you can take now.
The guidance aims to help pensioners avoid surprise bills by checking tax codes, pension adjustments and state benefit interactions before changes take effect.
Who could face the £2,500 charge in 2026
The charge will not apply to everyone over 65. It is most likely to affect people who receive multiple income types or whose tax codes are incorrect.
Common situations that increase risk:
- Receiving income from both a workplace pension and a private pension.
- Being on a taxed lump-sum withdrawal or flexible pension drawdown.
- Incorrect or outdated Personal Allowance or tax code on PAYE.
- Receiving taxable benefits that are not being reported to HMRC.
Why HMRC is warning over-65s
The warning is intended to reduce underpayment of tax caused by changes in pension rules and by automated coding notices that may not match individual circumstances.
HMRC wants people to check details so any adjustments can be made in time and to prevent larger end-of-year bills.
Practical steps to avoid an unexpected £2,500 bill
Use the checklist below to confirm your tax situation. These steps are simple and can prevent an unexpected charge.
- Check your tax code on your PAYE payslip or pension statement.
- Review all pension income: workplace, private, and any withdrawals.
- Log in to your HMRC Personal Tax Account to view records and messages.
- Report any undeclared income, benefits, or changes to HMRC early.
- Contact HMRC if you think a coding notice or bill is wrong.
Step-by-step: How to check your tax code and pension income
Start by gathering paperwork: pension statements, pay slips, and any HMRC letters. Then work through these steps.
- Sign in to your Personal Tax Account on GOV.UK and view your tax code and income summary.
- Compare the PAYE code with the pension provider and employer letters.
- If you spot differences, call HMRC or use the online form to request a review.
- Keep records of calls, dates and reference numbers.
How to correct an error before 2026
Correcting a tax code or reporting income now reduces the chance of a large retrospective bill. HMRC can issue coding adjustments that spread the change across the year rather than charging a lump sum.
If HMRC confirms you owe tax, ask if they can apply a time-to-pay arrangement to settle over several months.
Documents to keep handy
- Pension annual statements and PAYE payslips.
- All correspondence from HMRC, including coding notices.
- Bank statements showing pension payments and withdrawals.
Appealing an HMRC decision
If you receive a bill you believe is wrong, you have the right to ask HMRC for an explanation and to dispute the decision.
Key actions when appealing:
- Contact HMRC promptly and request a breakdown of the charge.
- Provide evidence such as pension schedules or certified documents.
- Ask for time-to-pay if you cannot settle the bill immediately.
Real-world example: How a small check avoided a big bill
Case study: Mary, 68, received pension income from a former employer and had flexible withdrawals from a personal pension. She noticed her PAYE code changed mid-year and checked her Personal Tax Account.
Mary discovered a private pension withdrawal had not been reported by her provider. She contacted HMRC, submitted the pension statement, and HMRC adjusted her tax code to collect any underpayment gradually. This prevented a single one-off bill close to £2,000 and instead spread it over the tax year.
When to seek professional help
If your situation is complex, for example involving large lump sums, overseas pensions or multiple income streams, consider a tax adviser or accountant. They can check interactions between state benefits and taxable pensions and help with appeals.
Look for advisers regulated by the Chartered Institute of Taxation or an authorised financial adviser for pension tax queries.
Final checklist before 2026
- Review all pension payments and withdrawals for the last 12 months.
- Check your HMRC Personal Tax Account monthly for messages and coding notices.
- Report any undeclared income or changes in your circumstances promptly.
- Keep copies of all correspondence and request time-to-pay if needed.
- Get professional advice for complex tax or pension cases.
Taking these steps now can reduce the chance that you will face a sudden charge of up to £2,500 in 2026. Regular checks and prompt communication with HMRC are the most effective way to stay in control of your tax position.