A million people are waiting in line for an HMRC tax top-up

A former pensions minister is cautioning people that they may not receive the top-up , which is available to one million people who did not receive pension tax relief

In the coming weeks, about a million workers will receive letters informing them that they are eligible to receive money from the government.

This month, HMRC is launching a campaign to provide top-ups to individuals who were denied pension tax relief due to the administration of their workplace pension plan.

The top-up may be available to employees whose occupational pension plans provide tax relief through a net pay arrangement (NPA).

A non-performing asset (NPA) occurs when pension contributions are deducted from your monthly income prior to tax computation. It implies that you occasionally receive tax relief.

Watch the entire video here: Generally, individuals who make £10,000 or more annually are automatically enrolled in workplace pension plans; however, under the NPA method, individuals who make between £10,000 and £12,570 and do not pay income tax are not eligible for pension tax relief.

These individuals would receive pension tax relief if they were enrolled in a workplace pension plan that used the relief at source (RAF) method. The employer would automatically request tax relief from the government to augment their pension.

Whether they are enrolled in a workplace program that employs the NPA or RAF method is not up to the employees.

Approximately one million people are estimated to be impacted by the government's efforts to compensate lower earners who have been enrolled in NPA occupational schemes since 2024-2025. Of these, 75% are women who may have made less money as a result of working part-time or taking a career break.

The top-ups will be paid by bank transfer and have an average value of £70.

When can I expect to get the top-up?

HMRC will begin contacting the one million eligible individuals this month through their personal tax account or through letters sent in the mail.

These letters or notes on personal tax accounts, according to HMRC, will outline what individuals must do in order to accept payments, which are anticipated to begin being claimed over the "coming months."

According to HMRC, the letters will be distributed gradually starting in early 2027.

"Real risk" low-income people won't get free money.

Former pensions minister Steve Webb, who is currently a partner at pension consultants LCP, cautioned that individuals who unexpectedly receive these letters offering them money may believe they are a scam and fail to claim their entitlements.

"The process of getting these payments to the right people is going to be incredibly painful and there is a real risk of huge non-take-up," stated Webb.

"Most people won't know anything about this problem and might be wary of an unexpected letter from HMRC offering them free money."

In order to ensure they don't miss anything, Webb is advising people to check their post in the upcoming weeks.

"We know some people may be cautious about unexpected contact, so we provide clear information about what to expect and how to verify the contact is genuine," a representative for HMRC stated.

Customers should only reply through official HMRC channels and can verify a letter's authenticity on gov . uk. To claim a payment, you should never request passwords, PINs, or money transfers."