There has been an increase in the number of errors on tax codes for working pensioners, which HMRC says is down employer error when completing PAYE returns.

HMRC has issued guidance on the procedures to follow when moving pensioners to a new PAYE scheme reference.

When a pensioner is moved from one PAYE scheme reference to another, the employer must ensure that the first Full Payment Submission (FPS) from the new PAYE scheme reference is submitted after the last FPS from the old reference has been sent. Otherwise, HMRC will set up the new pension source as a secondary employment and may issue incorrect codes.

Employers should make sure that the start date of the first FPS relates to the date that the pensioner joined the new scheme reference. If the start date used is the date that the pensioner started at the old scheme reference, this will wrongly create employments for earlier years at the new scheme reference.

HMRC has also told employers not to complete the 'Occupational Pension Bereavement' field on the first FPS from the new PAYE reference if the pensioner was not recently bereaved as completing this field will prompt HMRC to wrongly issue recent bereavement forms to widows/widowers which may cause upset.

More details are available from HMRC