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HMRC internal manual

PAYE Manual

PAYE operation: pensioners: DWP uprating service of state pensions

The Department for Work and Pensions (DWP) Uprating Service provides a magnetic tape which is run against the database and enables state pensions / benefits deductions to be automatically revised at Annual Coding.

The Uprating Service provides a weekly snapshot of an individual’s state pension for the current year. The state pension / benefits uprating process in January then converts this to an annual amount and applies the annual percentage increase to arrive at a figure for CY+1. You should be aware that there may be some instances where the amounts notified by the DWP are not representative of the true annual figure. Where a pensioner notifies you of a different figure, code the amounts advised by the pensioner.

State pension uprating and payment rules

State Pension Age (SPA) is on or after 6 April 2010

Where an individual reaches or has reached their SPA on or after 6 April 2010, their pension payday (Monday to Friday) will be allocated based upon the final two numbers of their National Insurance number. There will be no increase in benefit during the first week in April and as a result, the Uprating Service will always calculate the CY+1 coding deduction based on 1 week at the old rate and 51 weeks at the new rate.

State pensions can also be paid fortnightly, and this has been reflected in the updated IABD screens from October 2010.

Note: For details of how NPS calculates the actual amount of state pension in the first year, and details of the ‘State Pension Age’ automated scan, see PAYE76086.

SPA is before 6 April 2010

Where the individual reached their state pension age prior to 6 April 2010, DWP make payments of state pensions on a fixed payday. State pension is paid on a Monday, except for widow beneficiaries who receive their pension on a Tuesday.

As a result the Uprating Service will calculate the CY+1 coding deduction according to the day on which 6 April falls. This is because where 6 April falls on a week day after the Monday, these pensioners will only receive the new rate of state pension for 51 weeks.

The Uprating Service will therefore use the calculations below to calculate the annual amount to be included in the code

  • In years when 6 April falls on a Tuesday, Wednesday, Thursday or Friday the Uprating Service calculates the coding deduction at 1 week at the old rate and 51 weeks at the new rate
  • In years when 6 April falls on a Saturday, Sunday or Monday, the Uprating Service calculates the coding deduction at 52 times the new rate

Annual Coding

If Annual Coding has not yet taken place, but ‘NIB / IB Uprating’ is recorded in Contact History, you should not amend the benefit figure held in CY+1 IABD.

If, exceptionally, following the DWP uprate but prior to Annual Coding, you receive correspondence to advise the rate of benefit has changed, for example where the rate of pension has increased following bereavement, you should calculate the CY+1 figure required using CY details, which will be uplifted at Annual Coding Final.