HMRC refunded £44 million to pension savers between January and March 2025, new figures show, ahead of an overhaul to the pension tax code system.State pensioners told to ‘chase’ HMRC for free £2,881 payment they’re owed
State pensioners have been told to “chase” HMRC for a free £2,881 payment they’re owed. HMRC refunded £44 million to pension savers between January and March 2025, new figures show, ahead of an overhaul to the pension tax code system.
More than 15,000 people reclaimed an average of nearly £3,000 after being taxed at an emergency rate when making pension withdrawals.
A total of £44,003,977 was repaid from 1 January to 31 March, according to the latest data from HMRC. Over 15,000 reclaim forms were processed during the quarter, with an average reclaim of £2,881. More than £1.4 billion has now been reclaimed by people overtaxed on pension withdrawals since 2015.
READ MORE Drivers face fines for dropping parking tickets on floor in UK crackdown
Tom Selby, director of public policy at AJ Bell, said: “HMRC’s outdated approach to the taxation of flexible pension withdrawals continues to hit hard-working savers in the pocket.
“These figures are likely to be only the tip of the iceberg, however, as they only capture those who fill in the relevant HMRC reclaim form. In reality many more people will not go through the official process of reclaiming the money they are owed. As a result, they will be reliant on HMRC putting their affairs in order at the end of the tax year.”
“We have only just blown out the candles on the cake celebrating 10 years of pensions freedoms. It is simply unacceptable that after all this time the Government has still not managed to adapt the tax system to cope with the fact Brits are able to access their pensions flexibly from age 55, instead persisting with an arcane approach which hits people with an unfair tax bill, often running into thousands of pounds, and requires them to fill in one of three forms if they want to get their money back within 30 days,” added Selby.
Jamie Clark, retirement specialist at Quilter, commented: “The latest pension flexibility statistics reveal HMRC’s plans to streamline tax coding from the current tax year couldn’t come soon enough.
“HMRC’s new tax coding process should not only reduce the administrative burden on savers, but hope it will also minimise the number of overpayments being made in the first place. Nonetheless, pension withdrawals will remain a challenge.
“Many people are still reliant on their pension savings to manage financial pressures, and any hasty decision to access these funds could not only result in unintended, and often unexpected, tax consequences, but they could also hamper longer-term financial plans.”
Clark added: “With hope, we will see the number of repayment claim forms being processed fall from here on out thanks to HMRC’s efforts to improve the system, but there is still a long way to go to ensure it works seamlessly.
“In the meantime, it is likely that some retirees will still face significant overpayments and subsequently the often arduous task of reclaiming their money.”