HMRC to contact one million UK residents regarding pension tax relief

HMRC is launching a major campaign to contact approximately one million low earners in the UK who may be entitled to a pension tax relief top-up. The initiative targets individuals whose workplace pension schemes utilize a Net Pay Arrangement (NPA), where contributions are deducted from salary before income tax is calculated. This system can prevent certain low earners from receiving full tax relief.

Estimates from a 2021 government consultation suggest the average payment could be around £53, with women expected to make up about three-quarters of those affected. HMRC intends to roll out these letters gradually through early 2027, with payments expected to begin within the next few months once claims are processed.

Authorities have issued warnings to prevent eligible recipients from discarding the correspondence. There are concerns that individuals may mistake the letters for scams or be suspicious of unexpected offers of money. HMRC has advised citizens to verify the legitimacy of any contact via official gov.uk channels and noted that they will never ask for passwords, PINs, or money transfers to facilitate a payment.