From August 2026, HMRC is writing to around 1 million low earners who missed out on pension tax relief. The top-up is worth 20% of gross workplace pension contributions for a year in which total taxable income fell below the personal allowance. It affects people whose occupational scheme uses a net pay arrangement; about three quarters of those eligible are women.
TL;DR · LAST REVIEWED 29 August 2026
- HMRC is contacting around 1 million low earners from August 2026 who missed out on pension tax relief.
- The top-up is worth 20% of workplace pension contributions for years taxable income fell below the personal allowance.
- Payments are not automatic; eligible people must respond to the HMRC letter, and each year from 2024 to 2025 is assessed separately.
KEY FACTS
- HMRC is writing to around 1 million low earners from August 2026 about missed pension tax relief
- Affects workers whose workplace scheme uses a net pay arrangement rather than relief at source
- The top-up is worth 20% of gross workplace pension contributions for a qualifying year
- Applies where total taxable income fell below the £12,570 personal allowance
- Average payment is around £53 a year; roughly 200,000 people are in line for £100 or more
- About three quarters of those eligible are women
- Eligibility is assessed separately for each tax year from 2024 to 2025 onwards; payments are not automatic
What HMRC is paying and who gets it
HMRC is contacting individuals who contributed to a workplace pension through a net pay arrangement but did not receive tax relief because their income was below the personal allowance. The top-up is calculated as 20% of the gross contributions made in a qualifying tax year. The letters will be sent in phases from August 2026, and eligible individuals will need to register to receive the payment. The average payment is around £53 per year, with roughly 200,000 people expected to receive £100 or more. This initiative addresses a long-standing anomaly where low earners in certain pension schemes did not benefit from the same tax relief as those in other arrangements.
RELATED GUIDES
- Should Pension Tax Relief Be Tied to UK Investment? The £60bn Question
- Self-Employed Pension Options UK 2026: SIPPs, LISAs, Tax Relief and Carry Forward
- UK Pension Tax Relief Explained 2026/27: Rates, Limits and How to Claim
- State Pension and the Frozen £12,570 Personal Allowance: What 2026/27 Means for Retirees
DISCLAIMER
This article is editorial information, not financial advice. Kael Tripton Ltd is not authorised or regulated by the Financial Conduct Authority. Figures were correct at the last review date shown above; verify current rates and rules with the primary sources listed below before acting.
Frequently asked questions
Who is getting a pension tax relief top-up from HMRC?
Around 1 million low earners in workplace schemes that use a net pay arrangement, whose total taxable income fell below the £12,570 personal allowance, are being contacted from August 2026.
How much is the HMRC pension top-up worth?
It is worth 20% of gross workplace pension contributions for a qualifying year. The average payment is around £53 a year, and roughly 200,000 people are in line for £100 or more.
Do I need to do anything to get the top-up?
Yes. Payments are not automatic. HMRC writes to eligible people first, and they then need to register and provide bank details so the top-up can be paid directly.
What is the difference between net pay and relief at source?
Relief at source adds a 20% top-up to contributions even for non-taxpayers. Net pay arrangements give relief at the person's marginal rate, which is 0% for those earning below the personal allowance, so low earners missed out.
How can I check the HMRC letter is genuine and not a scam?
Verify the guidance on GOV.UK and contact HMRC through its official channels rather than links in an unexpected message. HMRC will not ask for passwords or PINs, so be cautious about sharing details in response to unexpected contact.
SOURCES
- GOV.UK, Pensions relief relating to net pay arrangements – accessed 29 August 2026
- GOV.UK, Tax on your private pension: pension tax relief – accessed 29 August 2026
- GOV.UK, Income Tax rates and Personal Allowances – accessed 29 August 2026
- GOV.UK, HMRC employer bulletin – accessed 29 August 2026
