If you earn below the tax-free Personal Allowance and pay into a workplace pension, you may be owed money you never knew about. From autumn 2026, HMRC is starting to pay a pension "top-up" to more than a million low earners who missed out on tax relief because of the type of scheme they were enrolled in.
This guide explains what the low earners' pension top-up is, why it exists, how much you could get, and exactly what to do (and what not to do) when HMRC gets in touch. All figures are for the 2024/25 and 2026/27 tax years and are drawn from gov.uk.
What is the low earners' pension top-up?
The low earners' pension top-up is a payment from HMRC that refunds the basic-rate tax relief some workplace pension savers never received. It applies to people whose total taxable income is below the Personal Allowance of £12,570 and who save into a scheme run as a "net pay arrangement". HMRC estimates around 1.2 million people will benefit.
The payment corrects a long-standing quirk known as the "net pay anomaly". Parliament fixed it through new regulations, and the first payments cover pension contributions made in the 2024/25 tax year.
Why do low earners in net pay schemes miss out?
Workplace pensions give tax relief in one of two ways, and the method decides whether a low earner gets anything. Under "relief at source", the provider adds 20% basic-rate relief to every contribution, even for non-taxpayers. Under a "net pay arrangement", contributions leave your gross pay before tax, so someone earning below £12,570 has no tax to relieve and gets nothing.
| Feature | Relief at source | Net pay arrangement |
|---|---|---|
| When relief is applied | Provider adds 20% after each contribution | Contribution taken before tax is worked out |
| Non-taxpayer (income below £12,570) | Still gets the 20% top-up | Gets no relief |
| Higher earners | Claim extra relief via Self Assessment | Full relief automatic through payroll |
| Who the new top-up helps | Not affected | Low earners now get an HMRC top-up |
You can check which method your scheme uses on your payslip or by asking your provider. Our guide to how pension tax relief works explains both methods in more detail, and our guide to workplace pension auto-enrolment covers how you were signed up in the first place.
How much is the top-up and how is it calculated?
Your top-up equals the basic-rate tax relief you should have received but did not: 20% of the pension contributions you made in the year while your income was below the Personal Allowance. There is no earnings-linked cap, but the payment only reflects contributions that actually missed relief.
A worked example
Priya works part time and earns £11,000 in 2024/25, below the £12,570 Personal Allowance. She is auto-enrolled in a net pay workplace scheme and pays 5% of her salary, £550, into her pension over the year. Because she had no tax to relieve, that £550 cost her the full amount.
Her top-up is 20% of £550, which is £110. HMRC pays it straight into her bank account once she confirms her details. Had she been in a relief-at-source scheme, that £110 would have been added automatically at the time.
What if only part of your income is below the allowance?
If some of your income is taxed and some falls under the Personal Allowance, HMRC works out the relief you missed on the untaxed portion only. You do not need to do this calculation yourself, because HMRC uses the payroll and pension data it already holds.
Who is eligible for the pension top-up payment?
You are likely eligible if, in a tax year from 2024/25 onwards, your total taxable income was below the £12,570 Personal Allowance and you contributed to a workplace pension run as a net pay arrangement. HMRC identifies eligible people automatically from the information employers and pension schemes already report.
- Income below the Personal Allowance. Your total taxable income for the year must be under £12,570.
- A net pay pension scheme. Relief-at-source savers already receive their 20%, so they are not affected.
- Contributions actually made. The top-up reflects the real contributions you paid in the year.
Around 1.32 million people were expected to be eligible from April 2024, with roughly 1.2 million benefiting each year. Most are part-time workers, and the majority are women.
When will HMRC contact you, and what should you do?
HMRC began contacting eligible people from autumn 2026 and will roll the process out in phases into early 2027. It will write to you by post or through your Personal Tax Account, then ask you to confirm your bank details through a secure digital service so the payment can be made.
The single most important point is this: you do not need to contact HMRC or do anything to claim. Wait to be contacted, then follow the instructions in the genuine message. If you have moved house, make sure your details are up to date so the letter reaches you. If you also think a wrong tax code has cost you money, that is a separate process, and our guide on claiming back emergency tax walks through it.
How to avoid pension top-up scams
Because HMRC is writing to people and asking them to confirm bank details, fraudsters will copy the process. HMRC will never text or email you a link demanding your bank details or an urgent payment. A genuine top-up is claimed through your own Personal Tax Account on gov.uk, never through a link in an unexpected message.
Red flags to watch for
- A text or email with a link telling you to "claim your pension refund now".
- Pressure to act within hours, or a threat that you will lose the money.
- A request for your full bank details, your PIN, or a fee to release the payment.
If in doubt, do not click. Log in to gov.uk yourself and report anything suspicious to HMRC's phishing and scams team. If you would like a qualified accountant to sanity-check a letter or your wider tax position, our tax advisory service can help, or you can book a free call.
Frequently asked questions
Do I need to contact HMRC about my pension top-up? No. HMRC identifies eligible people automatically and will contact you by post or through your Personal Tax Account. Wait to be contacted, then follow the instructions to confirm your bank details.
How much will my low earners' pension top-up be? It is 20% of the pension contributions you made while your income was below the £12,570 Personal Allowance. For example, £550 of contributions gives a £110 top-up.
Is the pension top-up payment taxable? The payment is technically chargeable to Income Tax, but if your income is below the Personal Allowance you will have no tax to pay on it in practice.
How do I know if a pension top-up message is a scam? HMRC never sends links by text or email asking for your bank details. Claim only through your own Personal Tax Account on gov.uk and report suspicious messages to HMRC.
What is a net pay arrangement? It is a workplace pension method where contributions are taken from your gross pay before tax is calculated, which means low earners below the Personal Allowance get no automatic tax relief.
Which tax years does the top-up cover? It starts with contributions made in the 2024/25 tax year, with payments beginning in 2026 and continuing for future years.
