HMRC has repaid thousands of pounds to UK taxpayers who were overcharged on tax related to flexible pension withdrawals. Between January and March 2026, 13,942 approved claims were submitted to recover excess tax payments, according to data from HMRC and the Labour Party.
Over this three-month period, more than £44.1 million has been refunded, with the average repayment rising to just over £3,160—an increase of nearly 10% compared to the previous year. Adam Cole, retirement specialist at Quilter, highlighted that while fewer people appear to be affected by emergency tax codes, the scale of errors when they occur is becoming more significant. This leaves retirees financially disadvantaged until HMRC processes their repayments.
Tom Selby, director of public policy at investment platform AJ Bell, noted improvements made from April 2025 when the government enhanced its tax coding system. The updated process moves taxpayers off emergency tax codes more efficiently, reducing the likelihood of large overpayments.
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Selby advises those making a pension withdrawal to consider a small “notional withdrawal” (such as £1) early in the tax year to avoid unexpected tax bills. Additionally, filing one of the three relevant HMRC forms can secure a refund within 30 days. If no action is taken, HMRC will automatically correct the tax position at the end of the year.
HMRC also clarified upcoming changes to the Normal Minimum Pension Age (NMPA), increasing from 55 to 57 starting 6 April 2028. Transitional arrangements will protect individuals who have accessed or become entitled to pensions before this date, allowing uninterrupted receipt of payments. For example, those aged 55 or 56 before April 2028 who have already designated funds, purchased an annuity, or started a scheme pension can continue receiving authorised payments. However, benefits crystallised after 5 April 2028 will generally require the pensioner to be at least 57, unless they qualify for protected pension age or other exceptions.