HMRC pension tax refund letters: How to check if you’re owed money

More than 1million people are due a refund from HMRC.

The tax office has started rolling out a new Low Earner's Pension Payment, designed to compensate workers who missed out on pension tax relief because of the type of workplace pension scheme they were enrolled in.

HMRC estimates that around 1.32 million people could benefit from the change, with women expected to account for roughly three-quarters of people getting a refund.

Why is HMRC sending low earners pension tax refund letters

The issue comes from people who were automatically enrolled into workplace pensions but earned below the income tax threshold.

In the 2024/25 tax year, the personal allowance was £12,570. Anyone earning below this amount usually doesn't have to pay income tax.

However, the tax relief provided through a workplace pension can depend on how the pension scheme is operated.

There are two main methods:

• Relief at source: The pension provider adds basic-rate tax relief to the contribution.

• Net pay: Pension contributions are taken from salary before income tax is calculated.

Under a relief-at-source scheme, tax relief is normally added even if the person does not pay income tax. Under a net-pay scheme, the contribution is deducted before tax, meaning someone who earns below the tax threshold may not receive the same benefit.

HMRC is contacting people who may have been affected by this difference.

How much could you receive?

The payment is expected to average around £70, although the amount will depend on the individual’s circumstances and pension contributions.

The letters relate to missed pension tax relief for the 2024/25 tax year.

Some people may also be eligible for payments relating to other years, depending on the information held by HMRC.

Who could be eligible?

You may be contacted if you:

• Were automatically enrolled into a workplace pension

• Were in a pension scheme using the net-pay method

• Earned below the income tax threshold

• Made pension contributions during the relevant tax year

• May have missed out on tax relief as a result

Not everyone who earned below the tax threshold will qualify. Eligibility depends on the pension scheme, contribution history and information available to HMRC.

The scheme is expected to affect more women because they are more likely to work part-time or have periods away from work for caring responsibilities.

Do you need to apply for the payment?

If HMRC identifies you as potentially eligible, it should contact you directly.

You should not normally need to make a separate claim. However, you may need to respond to the letter and confirm your bank details so the payment can be made.

HMRC is expected to contact people by letter or through their online Personal Tax Account.

Watch out for scams, you don't need to pay a fee to receive the money.

How can you check whether an HMRC letter is genuine?

Scammers may use news about pension refunds to send fake messages. HMRC has warned that people should be careful about requests for personal or banking information.

If you receive a letter:

• Check that it refers to HMRC and the low-earner pension payment.

• Do not click on links in unexpected emails or text messages.

• Do not give your bank details to someone who calls you unexpectedly.

• Sign in to your GOV.UK Personal Tax Account independently rather than using a link in a message.

• Contact HMRC through the official GOV.UK website if you are unsure.