Thousands of pensioners across the UK could be owed money after accidentally overpaying tax on their pension withdrawals. HM Revenue & Customs (HMRC) has confirmed that many retirees may be eligible for refunds – but you’ll need to act fast to reclaim what’s yours.
Why Are Pensioners Overpaying Tax?
When you start withdrawing from your pension, HMRC often applies an emergency ‘Month 1’ tax code. This means your usual tax-free allowance is divided by 12, potentially pushing you into a higher tax bracket unnecessarily. The result? Many end up paying more tax than they should.
Who Might Be Affected?
The issue typically affects those who:
- Take their first flexible pension withdrawal
- Make irregular or one-off withdrawals
- Have multiple income sources in retirement
How to Check If You’ve Overpaid
Look out for these tell-tale signs:
- Your pension provider deducted more tax than expected
- You made a large one-off withdrawal
- Your tax code changed to ‘BR’, ‘D0’ or ‘D1’ during withdrawal
Claiming Your Refund – Step by Step
If you think you’ve overpaid, here’s what to do:
- Wait until the end of the tax year – HMRC may automatically refund you
- If not, complete form P55 for lump sum withdrawals
- For regular withdrawals, use form P53Z if you’re still working or P50Z if you’ve stopped
- Submit your claim online via your Government Gateway account
Time Is Running Out
You have four years from the end of the relevant tax year to make your claim. With many people struggling with rising living costs, this could be money well worth reclaiming.
Expert tip: Keep detailed records of all pension withdrawals and tax deductions to make the claims process smoother.
