HMRC tax code change explained for specific age group as fears raised

HMRC advised how tax code changes can affect your state pension

HMRC has shed light on some tax code changes that could impact your state pension, following a query from a "worried" Brit who shared his experience. The amount of state pension you receive is largely determined by the National Insurance contributions you've made throughout your working life, which are directly linked to your tax code.

This can change due to various factors. 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 code 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."

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."

Tax codes are generally composed of an individual's tax-free annual personal allowance, depending on their circumstances. For many, this allowance is £12,570, which translates into a 1257 tax code. Typically, the majority will have the 1257L tax code as it signifies having one job, no untaxed income, taxable benefits or unpaid tax.

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

To qualify for any amount of the new state pension, a minimum of 10 qualifying years on a National Insurance record is also required. This might possibly be through NI paid on income from employment, National Insurance credits obtained from specific benefits, or voluntary contributions to cover any gaps in an individual's NI record.