The National Audit Office has reported that around 1.5 million UK pensioners are paying too much tax.

According to a recent report by the National Audit Office (NAO), around 1.5 million pensioners in the UK have overpaid a total of £250 million in tax since 2002-2003.

The NAO estimates that the pensioners affected will have overpaid by an average of £171 each.

According to the report, the errors occurred because “many people’s tax affairs become more complicated when they reach pension age and the HM Revenue & Customs’ (HMRC) systems do not cope well with their multiple sources of income.”

Around 500,000 pensioners are said to have underpaid tax by an average of £207, taking the nationwide total to £100m.

The HMRC introduced a new computer system in June 2009 in an effort to combat the errors.

Amyas Morse, Head of the NAO, said: “Older people want to pay the right amount of tax but too many pay more than they need to because they do not claim allowances to which they are entitled and because of errors.

“By providing a more coherent service, HMRC could make substantial savings as the number of enquiries from older people about their tax affairs would reduce.”

The NAO also estimated that around 3.2 million older people do not claim additional age-related tax allowances. Claiming the allowances would boost the average pensioner’s income by up to 4%.

The HMRC estimated that some 2.4 million pensioners have paid around £200m more in tax because they did not have their savings income paid in gross.

The NAO has called for the HMRC to rethink its approach to ensure pensioners receive the financial support they are entitled to and provide an overall more coherent service for older people.