One Million UK Workers to Get £70 Pension Refund From HMRC This Month

One million low earners in the UK will receive letters from HMRC over the next few months notifying them of pension tax relief payments they missed out on. The typical payment is £70, though amounts vary by individual circumstances. Most recipients earned close to but not more than £12,570 annually and worked for employers using Net Pay Arrangement pension schemes, which inadvertently gave them less tax relief than Relief at Source schemes. The payments are automatic and require no application, but experts warn many people may discard the letters believing them to be scams.

Why low earners missed out on tax relief

When you contribute to a workplace pension, the government normally allows tax relief, meaning some money that would otherwise go to tax is added to your pension pot instead. However, employees in Net Pay Arrangement schemes received less relief than those in Relief at Source schemes for technical reasons. Employees have no control over which scheme their employer uses. The government has now decided to make up the difference through a low earner’s pension payment.

Who qualifies and how to claim

Eligible recipients typically earned close to but not more than £12,570 annually, the income tax threshold. Around 990,000 women across the UK are expected to benefit. HMRC will contact eligible people automatically by letter or through their online personal tax account over the coming months. No application is needed. Recipients should verify letters are genuine by checking that HMRC will not contact them by text, email, or phone about this payment.

How to spot a genuine HMRC letter

HMRC will only contact people by letter or online account, never by text, email, or phone. Any such messages should be treated as scams. Steve Webb, partner at pensions consultancy LCP and former pensions minister, warned that “the process of getting these payments to the right people is going to be incredibly painful and there is a real risk of huge non-take-up.” Experts are concerned many people may ignore the letters, assuming they are a scam, meaning millions of pounds could go unclaimed.

Payment timing and future annual payments

The single payment initially relates to the 2024-25 tax year. Automated annual payments for those in the same situation in later years could be paid subsequently. The rollout will happen gradually over the next few months as HMRC processes and verifies eligibility across the one million affected individuals.

Final Thoughts

If you earn under £12,570 and worked in a Net Pay Arrangement pension scheme, expect an HMRC letter offering around £70. Verify it is genuine by checking the sender and method of contact. Ignoring the letter means missing money owed to you.

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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.