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1h ago

HMRC Data Shows 60,000 Pension Refund Claims Last Year as Emergency Tax Overcharges Rise

Emergency tax codes on first pension withdrawals trigger large upfront deductions that HMRC later repays.

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Overview

  • A Royal London FOI shows roughly 60,000 people reclaimed overpaid pension tax in 2023–24, about a 20% rise on the previous year.
  • The average refund was £3,342, with around 11,700 reclaiming £5,000 or more, about 2,400 receiving over £10,000, and the top 25 averaging £106,900.
  • From April, HMRC began automatically updating tax codes for people newly receiving a private pension and has outlined an overhaul intended to deliver quicker refunds.
  • Overtaxed savers can reclaim in-year using HMRC forms P55, P53Z or P50Z, with the tax authority saying it aims to process repayments within 30 days.
  • Since 2015, refunds have totaled about £1.4bn, and Royal London warns that planned inheritance-tax treatment of unused pensions from 2027 could drive more large one-off withdrawals.