HMRC repays £50million to pension savers over emergency tax code errors

Thousands of pension savers are being urged to check whether they are owed a tax refund after HM Revenue and Customs (HMRC) repaid more than £50million to people who were overtaxed when accessing their retirement savings.

New HMRC figures show more than 12,500 people reclaimed overpaid tax on flexible pension withdrawals between April and June 2026.

During the three‑month period, HMRC refunded £50,353,656.76, with the average repayment coming in at almost £4,000 per person.

The overpayments occur because emergency tax codes are often applied when people first access their pension flexibly, meaning more tax is deducted than is ultimately owed.

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Adam Cole, retirement specialist at Quilter, said: “HMRC’s latest figures show that between April and June 2026 more than 12,500 people had to reclaim tax after accessing their pension flexibly, with more than £50.3million repaid in the second quarter of the year.”

He noted that while the number of reclaim forms submitted had fallen slightly compared with the same period in 2025, the total refunded amount had increased by around £2million.

“The average repayment stands at almost £4,000, not an insignificant amount of money,” he said.

“Instead, retirees are being left out of pocket while they wait for HMRC to return their own money — a process that could and should be quicker or avoided altogether.”

Emergency tax codes continue to be applied to the first flexible pension payment before HMRC has an accurate picture of a person’s annual income, creating a mismatch between the tax deducted and what is owed.

Between April 1 and June 30, HMRC processed:

• 10,200 P55 repayment forms
• 2,001 P53Z forms
• 411 P50Z forms

The latest figures suggest the issue continues to affect thousands of pension savers each year despite repeated calls for reform.

Mr Cole said the repayments come at a time when many retirees still face financial pressures despite annual state pension increases under the triple lock.

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He also highlighted concerns over the continued freeze to the personal allowance.

“The new Government has backed away for now from the idea that the personal allowance should be unfrozen and uplifted,” he said.

“A move that would help pensioners and reduce their administrative burden given how close the state pension is to that allowance.”

The state pension has edged closer to the frozen personal allowance in recent years, meaning more retirees are becoming liable for income tax.

For those accessing their pension flexibly, the continued use of emergency tax codes can result in temporary overpayments, with affected savers required to reclaim the money directly from HMRC.

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