HMRC sending one million letters saying 'you're due £70ish' to low earners with a workplace pension – how to tell if yours is genuine

This issue relates to how your workplace pension is taxed

If you contribute to a workplace pension, your employer will choose the type of scheme you're entered into – which will be either a 'relief at source' or 'net pay' scheme. Here's how they both work:

• With a 'relief at source' pension – your pension contributions are taken after your tax is calculated. Your pension provider claims 20% tax relief direct from the Government for every 80% you contribute, which is then added to your pension pot. You get this even if your total income is below the personal allowance for income tax, which is £12,570 a year for most people.

• With a 'net pay' pension – your employer takes your pension contributions from your pay before tax is calculated. Those who earn below the £12,570 personal tax threshold don't receive tax relief on their pension contributions; meaning they miss out on the 20% tax relief contribution.

Low earner in a net-pay pension scheme in 2024/25? You should get the top-up

In a bid to address this unfairness – following years of investigations both by campaigners, such as the Low Incomes Tax Reform Group (LITRG), and by the Government – the Government is now contacting eligible low earners offering them a top-up payment for the 2024 to 2025 tax year.

This will be paid to those who earned below or close to the personal tax threshold and didn't receive income tax relief on their pension contributions in 'net pay' schemes. Here's how it'll work:

• The top-up payment will be equal to the amount of tax relief you would've received if you were in a 'relief at source' pension scheme. For 2024/25, payments are an average of £70, though HMRC couldn't give us the minimum or maximum payout figures.

• If you're already receiving some tax relief, you'll only get a partial top-up. This means that if your income is above the personal allowance before deducting the pension contribution, but is below the personal allowance after the contribution is deducted, you will get a partial top-up payment to make up the difference.

• The payment is not taxable and will not affect your benefit entitlement.

• Payments will not be backdated prior to 2024/25, but future payments will be made going forwards. HMRC said initially it'll be issuing payments to those eligible for the 2024 to 2025 tax year, with payments for the 2025 to 2026 tax year to come next year.

• The process of notifying those eligible and how they'll receive their payment will be the same every year. We've outlined this process below...

You'll be contacted by HMRC if you're affected – check it's genuine

If you were affected in 2024/25, you will receive a letter from HMRC between late 2026 and early 2027. HMRC wouldn't provide us with exact dates. You'll also receive a message via your Personal Tax Account (PTA) if you have one.

Fraudsters regularly attempt to impersonate HMRC to pressure victims to part with their cash, so it's important to make sure any communication you receive is genuine – and stay safe from scams.

You can check whether the details of the letter are genuine by cross-referencing it against information that will be uploaded on this Gov.uk page under the 'Low Earner's Pension Payment' sub-heading – though HMRC says it will only update this page with the relevant information once letters are sent.

You WON'T receive a call, text or email.

HMRC says that if you don't qualify, you won't hear anything.

You'll need to give HMRC your bank account details

The payment will be paid to you directly – it is not made to your pension scheme; though you can choose to move it into your pension scheme if you wish.

The payment will be made via bank transfer, so you'll be asked to supply your bank account details to HMRC to receive the payment but ONLY via your Personal Tax Account, or over the phone if you don't have a PTA.

The number you'll need to call will be on the letter you receive. HMRC will also publish the number on Gov.uk at the same time that it publishes details of the letter online.

HMRC says it will never ask for money transfers, PIN codes, or passwords.

You'll have four years from the end of the applicable tax year to accept your payment.