HMRC Issues £50m in Pension Tax Refunds: How to Claim Your £4,000 Average

HMRC has repaid more than £50 million in tax to pension savers between April and June 2026, with over 12,500 claims averaging £4,000 each. Many retirees were charged emergency tax on first pension withdrawals, treating one-off payments as if they would continue monthly. Thousands more may be owed refunds but have not yet claimed.

Why pension savers are getting emergency tax refunds

When you make your first withdrawal from a pension, HMRC can apply emergency tax. The tax authority assumes your withdrawal will repeat every month for the full tax year, even if you take only one lump sum. This results in overpayment. You can withdraw 25% of your pension tax-free from age 55, then pay normal income tax on the remaining 75%. If HMRC has overcharged you under this emergency code, you can claim the difference back.

How to claim your refund from HMRC

You do not need to wait for HMRC to contact you. Fill out a form online to claim back the difference between emergency tax paid and your normal tax rate. Use form P53Z if you have emptied your pension pot and are still working or receiving benefits. Use form P5 if you have emptied your pot and are not working or receiving benefits. Claims can be submitted up to four years from the end of the relevant tax year.

Wider tax refund warnings from HMRC

HMRC warned in August that almost 700,000 people did not claim tax refunds they were owed last year. The average refund across all types of overpayment stands at £473. Common reasons for overpayment include being assigned the wrong tax code after a job change, a change in workplace benefits, or starting to receive a pension. HMRC urged taxpayers to download its app to check for unclaimed refunds and verify their tax code is correct.

Delays in refunds add pressure on retirees

Adam Cole, retirement specialist at Quilter, noted that retirees are left out of pocket while waiting for refunds, a process that could be quicker or avoided entirely. This pressure comes at a time when retirees face rising costs despite the triple lock on state pensions. The average £4,000 refund represents money that could be used sooner to ease financial strain.

Final Thoughts

If you withdrew from your pension for the first time in 2026 and were charged emergency tax, check your records and claim your refund now. The average repayment is £4,000, and you have up to four years to submit a claim.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.