HMRC is repaying thousands of pounds to UK households after overcharging them in tax. Data from HMRC and the Labour Party shows that 13,942 people submitted approved claims between January and March 2026 to recover tax paid on flexible pension withdrawals. In total, over £44.1 million was paid back during that period.
Average Repayment Rises to £3,160
Commenting on the latest figures, Adam Cole, a retirement specialist at Quilter, said: “The real shift is not the number of people affected, but the size of the mistakes being made. The average repayment has risen to just over £3,160, up almost 10% year on year. That suggests fewer people may be caught by emergency tax, but when it happens the sums involved are larger, leaving retirees out of pocket while they wait for HMRC to return their own money.”
Improved Tax Code Process
Tom Selby, director of public policy at investment platform AJ Bell, said: “From April 2025, the government improved its tax code process so people are moved from an emergency code to paying the right amount of tax more quickly.” He says those making a single withdrawal in a tax year “can potentially avoid the shock of a big overtaxation bill” by first taking out a “notional withdrawal” like £1. “Alternatively, you can fill out one of three HMRC forms and you should receive your tax back within 30 days,” he added. “If you don’t do this, the Revenue says it will put you back in the correct tax position at the end of the tax year.”
NMPA Increase from 55 to 57
Alongside the repayment figures, HMRC also provided further clarity on the planned increase in the Normal Minimum Pension Age (NMPA) from 55 to 57, due to take effect from 6 April 2028. The update confirmed that transitional arrangements will allow individuals who have already accessed, or become entitled to, pension benefits before that date to continue receiving payments without interruption. In particular, members aged 55 or 56 before April 2028 who have already designated funds, purchased an annuity, or started a scheme pension will be able to continue receiving those benefits as authorised payments after the change. However, HMRC clarified that any further benefits crystallised after 5 April 2028 will generally require the individual to have reached age 57, unless a protected pension age or other exception applies.
