Taxmen sent a pensioner a demand for two pence in arrears - and warned him he would face penalty interest if he failed to pay up.

Tony Taylor, 78, has been paying his tax correctly for more than 50 years, but a letter came from HM Revenue and Customs on Wednesday, claiming he had underpaid his last bill by two pence.

The former self-employed electrician, from Bagley Wood Road, headed down to the post office on Kennington Road on Thursday to settle his account with a single coin.

In January, Mr Taylor's accountant worked out how much income tax he should pay and he sent off a cheque before the month end deadline, but the self-assessment statement letter said he was two pence short.

Mr Taylor said: "It's mad. I paid them nearly £800 and now they're chasing me for tuppence.

"The letter told me I could start being charged interest.

"You'd think they would realise how that sounds."

The letter gave Mr Taylor the option of paying the money with his next tax bill, but said that he could start being charged interest if it is paid late.

Interest on underpayments is charged at 7.5 per cent over a tax year, which would mean a total interest payment of 0.15 pence.

In addition to interest, a five per cent surcharge is payable on any tax which remains uncollected after 28 February and a further five per cent is imposed on any amounts still unpaid after July 31.

On the two pence bill, this would mean fines of just over 0.2 pence, bringing Mr Taylor's total bill over the year to 2.355 pence.

The HM Revenue and Customs self-assessment helpline said it would not be usual practice to charge interest on such a small amount, but statement letters were sent out on an automated basis.

Mr Taylor said: "I did go down and pay up with a nice, shiny tuppence coin, because I've always paid my taxes.

"You give money to them all your working life and they're still after you like this. At least my family all had a good laugh about it."

The letter cost the tax office 23p to send, leaving the government department - and the tax payer - 21p out of pocket.

A spokeswoman for HM Revenue and Customs said that while individual cases could not be commented on, people would not be chased up for such small amounts.

She added: "Tax payers are entitled to know exactly what they owe us and what we owe them.

"A statement of account is issued when any amount will shortly become payable.

"This ensures that everyone receives at least one acknowledgement of their liability.

"If such a statement was not issued, then a person with a small tax liability, who chose to calculate their own tax, would not receive any confirmation of the amount to pay until further charges or interest became due."

Income tax is usually deducted straight from people's salaries, but everyone has a personal allowance that they can keep tax-free.

People with more complicated savings and tax affairs have to fill in tax return forms.