Millions of pensioners taxed without a P60: ATT calls for overhaul of state pension tax rules
Millions of state pensioners are being taxed each year without receiving a P60, making it difficult and impractical for them to check whether HMRC’s calculations are correct, the Association of Taxation Technicians (ATT) has warned.
Unlike private pensions and employment income, the state pension comes with no year-end summary showing how much is taxable. To add to the confusion, pensioners are also taxed on the amount they are entitled to in a tax year, rather than the amount they actually receive.
Because the state pension is paid four-weekly in arrears, on different days for different people, and is uprated annually under the “triple lock”. The calculated figure often does not match the total of payments physically received in the tax year, leaving pensioners confused and unable to reconcile HMRC’s figures with their bank statements.
As part of its top 10 asks for the tax system in 2026,1 the ATT highlights that this lack of transparency is a major driver of misunderstanding around the taxation of the state pension. Many pensioners wrongly believe it is not taxable at all, as no PAYE is deducted, while others assume it is paid monthly rather than four-weekly. Even where tax is collected automatically through PAYE on other income, the absence of a P60-style document makes it hard for pensioners to verify their tax position.
Jon Stride, Chair of the ATT’s Technical Steering Group, said:
“The state pension is one of the few mainstream sources of income where people are taxed without being given a clear annual taxable figure, such as a P60. Pensioners are expected to trust calculations they often cannot check, or are forced to contact HMRC for help in understanding their tax positions.
“Taxing the state pension on a receipts basis would bring it into line with private pensions and make the system far easier to understand. With more pensioners being brought into tax because of the personal allowance freeze, the lack of clarity is becoming a growing problem.”
The ATT notes that while a move to a receipts basis would require a one-off transitional adjustment, it would significantly reduce complexity in future years. With the personal allowance frozen until April 2031 and state pension rates continuing to rise under the triple lock, increasing numbers of pensioners will face income tax for the first time.
Notes:
- Read the full recommendations.