By Chris Marshall -BBC

Citywire scours the web for the best writing from across the world. Millions of pensioners have paid the wrong amount in taxes as HM Revenue & Customs has been unable to cope with the increased complexity of people's tax affairs when they retire.

The government’s auditor found that by March 2009, some 1.5 million older people had overpaid tax by an average of £171. This totals £250 million. Another 500,000 or so older people had underpaid tax by an average of £207, totaling £100 million.

The National Audit Office said that the errors came about as a result of discrepancies between HMRC’s records and tax deducted by employers and pension providers. The taxman’s systems struggled under the strain of calculating the tax to be deducted from multiple sources of income, leading to errors, the NAO concluded.

A new computer system was introduced in June this year and it is hoped that this will help reduce the level of errors.

Aside from HMRC’s blunders, some 3.2 million older people may also be paying more tax because they do not claim additional age-related tax allowances.

The NAO says that compared to other taxpayers, older people – whose tax affairs usually become more complicated at pension age – are less aware of their tax obligations and what they should do to comply.