HMRC warns state pensioners over tax code change which can impact payments

HMRC has broken its silence on tax code changes and how they could impact the Department for Work and Pensions ( DWP ) state pension. HMRC, the government tax department, has responded to a worried question from a concerned taxpayers.

One man, upon noticing a shift in his tax code as he reached state pension age, took to social media to question HMRC, saying: "I have just been entitled to make state pension this month. However, I am concerned as you have applied a full year to my tax code on one of my pensions. I will not receive a full amount this tax year - only 41 weeks of state pension.

"I have written you a letter for help." In response, HMRC asked for further clarification and provided some crucial information for others who might have noticed similar changes to their tax codes. The official X page explained that any tax cde ending with X, W1 or M1 indicates that the code "will not be used for the whole year, just for the remainder of the year."

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The man confirmed that his code ended with an X, to which HMRC added: "That is actually only going to be used for part of the year, so although it's using the full year value, the code will only be used on the later part of the year, so you don't pay too much tax. It's because the tax code itself is always based on annual figures."

The tax code can be appended by W1, M1 or X -known as "emergency tax codes" for singular situations. A person must have 35 years' worth of National Insurance contributions to receive the full new state pension amount, £221.20 per week.

On its website HMRC says: "If your tax code has ‘W1’ or ‘M1’ or ‘X’ at the end. These are emergency tax codes."