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HMRC Urges Taxpayers to Check for Refunds as Pension Repayments Top £1.5 Billion

Many first-time lump-sum pension withdrawals are overtaxed under emergency PAYE rules, prompting people to reclaim through GOV.UK or the HMRC app.

Overview

  • HMRC is using X and its mobile app to remind people to review their records and claim any tax rebates they are due.
  • Official figures show £48.5 million was repaid for overtaxed pension withdrawals in Q3 2025, taking total repayments since Pension Freedom beyond £1.5 billion, with 13,721 claims filed.
  • In the previous quarter, HMRC returned £48.7 million on more than 13,000 claims, with typical refunds around £3,800 per person.
  • Experts say over-deductions often stem from ‘month 1’ emergency tax applied to initial or one-off lump-sum withdrawals, which can later be reclaimed via HMRC forms or year-end reconciliation.
  • GOV.UK lists other common refund triggers including job expenses, redundancy payments, savings interest or PPI payouts, Self Assessment adjustments and employment income.