It’s real. HMRC has started posting letters to roughly a million low-paid workers about the Low Earner’s Pension Payment. Most will get around £70. There’s no form to fill in, and HMRC will never ring, text or email you about it. A letter from the taxman offering you money does sound dodgy. That’s why the HMRC low earners pension refund has caused so much head-scratching since letters started dropping in August 2026. It’s a real scheme, and the rollout runs in stages until early 2027.
- Around a million people will receive a letter. Three in four are women.
- The payment is 20% of what you put into your workplace pension that year.
- Most get about £70. A 2022 Treasury estimate said £53 on average.
- Round one covers the 2024/25 tax year. More years follow.
- The cash goes into your bank account, not your pension pot.
- You don’t have to apply. HMRC already knows who qualifies.
What the HMRC letter is Actually About
Pay into a pension and the government gives back some of the tax you’d have paid otherwise. That’s pension tax relief, and most people get it automatically. Plenty of low earners didn’t, not because of anything they did, but because of how their employer’s scheme was set up. The government has finally agreed to hand over what they missed. BBC coverage made the point plainly: the letters are genuine, and most people getting one are still working, not retired.
Net Pay Versus Relief at Source: The Quirk That Caused It
There are two ways a scheme can hand you tax relief. Staff have no say over which one their employer picks.
| Relief at Source | Net Pay Arrangement | |
| How you pay in | From your take-home pay | Taken before income tax is worked out |
| Basic-rate taxpayer | HMRC tops it up 20%, so £80 becomes £100 | £100 goes in, and your tax bill drops by £20 |
| Non-taxpayer under £12,570 | Still gets the 20% top-up | Nothing, because there’s no tax to knock off |
Earn between £12,570 and £50,270, and both routes leave you in the same place. The problem arises below the tax threshold. Auto-enrolment arrived in 2012 and sweeps you into a pension once you earn £10,000 a year, well under the £12,570 personal allowance. So you can be saving, paying no tax, and getting nothing back. Relief at the source would still add the 20%. Net pay gives you nothing, because cutting a tax bill of zero achieves nothing. The Local Government Pension Scheme (LGPS) is one of the big schemes running on net pay. Ministers spotted the issue in 2021 and promised a fix from 2024/25. Five years on, the letters are finally out.
How Much is the HMRC Low Earners Pension Refund Worth?
It’s 20% of your gross workplace pension contributions for a year when your taxable income sat under £12,570. For most people, this refund is around £70. Treasury figures from July 2022 put the average lower, at £53 a year, with roughly 200,000 people due £100 or more. Your figure depends on how much went into your pot.
Who is Expected to Get Paid?
The government’s policy paper on GOV.UK reckoned 1.32 million people would qualify from April 2024. HMRC is writing about a million in this first batch. Women dominate the list. Metro puts them at 75% of those affected, near 990,000. That’s part-time and lower-paid work showing up in the numbers. The Eastern Daily Press found thousands in Norfolk alone.
Who is Eligible for the Payment?
You might be owed money if, from 2024/25 onwards, you:
- paid into the LGPS or any other workplace pension using a net pay arrangement, and
- got no tax relief on it because you earned too little to pay income tax.
Each tax year is judged on its own. In the same boat in 2025/26? Expect another letter later.
Do I Need to Apply?
No. There’s nothing to claim and nothing to sign up for. HMRC works out who qualifies from the records it already holds, then contacts you by post or through your Personal Tax Account. What it doesn’t have is your bank details, so you’ll need to hand those over before anything is paid. Can’t use the online services? Accept over the phone instead. And if no letter has turned up, don’t ring HMRC. Yours may simply not have been sent yet.
How to Check the Letter is Real
Scammers will try to copy the letter. A few quick checks:
- Search GOV.UK for “check if a letter you’ve received from HMRC is genuine” and look for “Low Earner’s Pension Payment“, which is listed there from August 2026.
- Check that HMRC has your current address.
- Any text, email or call about this payment is fake. Post or online tax account only.
- Never give out a PIN or password. Never pay a claims firm to do it for you.
An HMRC spokesperson said the department will “never ask for passwords, PINs or money to be transferred” when you claim.
Why Experts Fear the Cash Will Go Unclaimed
Sir Steve Webb, a former pensions minister now at LCP, warns, “There is a real risk of huge non-take-up.” Most people have never heard of the net pay problem, so free money in the post smells like a con. Jon Greer at Quilter puts it well. Finding a million people was the clever bit. The challenge is getting them to take the money. Kenny MacAulay, chief executive of the Acting Office, called mass letter-writing “a slow and ineffective way” to reach anyone, in comments carried by The i Paper. HMRC says it’s running an awareness campaign on social media and elsewhere.
What to Do When Your Letter Lands
Don’t bin it. Read it, check it against GOV.UK, then sign in to your Personal Tax Account and pop in your bank details. It arrives by bank transfer, not cheque, and it’s yours to spend rather than locked in a pension. Once you’re registered, later years should be less faff.
FAQs
Is the HMRC low-earner pension refund letter a scam?
Ans: No, it’s genuine. Check it on GOV.UK first, then reply only through official HMRC channels.
How much money will I actually get?
Ans: About £70 for most people, though it varies. It’s 20% of what you paid into your workplace pension that tax year.
Do I have to apply for it?
Ans: No. HMRC picks out eligible people itself. All you need to do is confirm your bank details so that it can pay you.
Will HMRC email, text or phone me about this?
Ans: Never. It’s sent to your personal tax account. Any call, text or email is someone trying it on.
Does the money go into my pension pot?
Ans: No, straight into your bank account by transfer. HMRC isn’t sending cheques for this one.
What if I don’t get a letter?
Ans: Sit tight. They go out in waves until early 2027, so wait rather than chase HMRC.
Sources & References
- BBC – The letters are genuine, and most people getting one are still working, not retired.
- Metro – Women dominate the list at 75%, which is around 990,000.
- The i Paper – Kenny MacAulay, chief executive of the Acting Office, called mass letter-writing “a slow and ineffective way” to reach anyone.
- Eastern Daily Press – Thousands of beneficiaries are from Norfolk alone.
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