HMRC will be writing to 1.32 million Brits in the coming months, explaining how to claim a £70 pension top-up refund payment.

The ‘low earner’s pension payment’ is designed to reimburse those who missed out on pension tax relief, because of their way their workplace’s pension scheme works.

You’ll get the letter if you earned close to £12,570 a year; the threshold at which you starting paying income tax.

According to HMRC, women are estimated to make up 75% of those eligible for the free money — which works out at around 990,000 women.

But, according to former pensions minister, Steve Webb, there is a ‘real risk of huge non-take-up’ as people will assume it’s fraudulent.

‘Most people will not have a clue about this issue and may be suspicious of a letter out of the blue from HMRC offering them free money,’ he said. ‘Some may suspect it is a scam.’

What is the low earner’s pensions payment?

It’s all down to a confusing quirk in the way that tax and pensions are dealt with.

When you pay into a pension, you get tax relief on your contributions, which means some of the money you’d otherwise pay in income tax is put towards your pension instead.

However, if your workplace uses a Net Pay Arrangement pension scheme (where contributions are deducted from gross earnings before tax), you’d have received less tax relief than on a Relief at Source scheme (where contributions are deducted from your earnings after income tax and National Insurance come out).

Earlier this year, the government announced that it would provide top-up payments to those who missed out. The typical refund works out at around £70, but payments may vary.

Letters are being sent from now, and will continue to go out in stages until early 2027 — so keep an eye if you think you qualify.

How to spot a HMRC scam

The first thing to note here is that you don’t need to apply for the low earner’s pension payment — HMRC will send you a letter to your home, or via your online account.

As such, it’s worth making sure your details are up to date ahead of time.

POLL
Poll

What would you do if you received a letter from HMRC about a £70 pension top-up?

  • Immediately check its authenticity online.Check

  • Ignore it assuming it’s a scam.Check

  • Follow the provided instructions cautiously.Check

  • Contact HMRC directly for verification.Check

Warning signs for a scam include being asked for details like passwords or PIN codes, or being asked to transfer money. This likely means the correspondence isn’t legit.

If you’re concerned, HMRC has a page on its website dedicated to confirming whether a letter is genuine.

A HRMC spokesperson commented: ‘Customers don’t need to apply or contact us – we’ll send them information about how to receive their payment via post or their online tax account.

‘We know some people may be cautious about unexpected contact, which is why we provide clear information about what to expect and how to verify the contact is genuine.

‘Customers can check a letter is genuine on GOV.UK and should only respond via official HMRC channels. We’ll never ask for passwords, PINs or money to be transferred to claim a payment.’

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