Key facts
- HMRC repaid £50,353,656.76 to over 12,500 pension savers between April and June 2026.
- The overpayments were caused by emergency tax codes applied to initial flexible pension withdrawals.
- The average refund amount was approximately £4,000 per person.
- Savers can reclaim overpaid tax by submitting specific forms to HMRC or by waiting for an end-of-year reconciliation.
HM Revenue and Customs (HMRC) has repaid more than £50 million to thousands of pension savers who were overtaxed when accessing their retirement savings. Figures released show that between April and June 2026, over 12,500 individuals reclaimed overpaid tax, with the average repayment amounting to nearly £4,000.
The overpayments typically occur when emergency tax codes are applied to the first flexible pension withdrawal. This method often deducts more tax than is ultimately owed because HMRC may assume the withdrawal rate will continue throughout the tax year, even if it is a one-off event.
Adam Cole, a retirement specialist at Quilter, highlighted that while the number of reclaim forms submitted has slightly decreased compared to the previous year, the total amount refunded has increased. He noted that retirees are left out of pocket while waiting for their money to be returned, a process that could be expedited or avoided.
To reclaim overpaid tax, individuals can fill out specific forms: P55 for partial pension access, P53Z for emptying a pot while still working or receiving benefits, and P50Z for emptying a pot without working or receiving benefits. Alternatively, they can wait for HMRC to process the refund at the end of the tax year. Cole also pointed out that the frozen personal allowance exacerbates the issue, as the state pension is nearing this threshold, making more retirees liable for income tax.