Pension tax refunds: how to get your money back if you have been overcharged
Thousands of retirees recovered more than £50 million in overpaid tax from flexible pension withdrawals in the second quarter of 2026. Are you due a pension tax refund?
Pensioners have recovered millions from HMRC after being taxed too much when making flexible pension withdrawals in the second quarter of the year.
Retirees reclaimed more than £50.3 million in overpaid tax on their pension withdrawals from 1 April to 30 June 2026, new data from HMRC shows.
The total number of retirees putting in a claim for tax repayment was 12,612 in the second quarter of 2026.
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Although the number of Brits claiming a pension tax rebate has fallen marginally compared to the same time last year, the amount reclaimed has increased by almost £2 million.
The average amount of tax repaid to pensioners was £3,992 per person in the last quarter, up slightly from an average of £3,814 in the same period last year.
That figure is “not an insignificant amount of money, and is money that could be put to work sooner and to better use”, said Adam Cole, retirement specialist at wealth manager Quilter.
“Instead, retirees are being left out of pocket while they wait for HMRC to return their own money, a process that could and should be quicker or avoided altogether.”
Cole added that despite pension freedoms being in place for more than 10 years, HMRC is still struggling to fix the “scourge” of overpayments and has not yet answered the tax question satisfactorily.
“Until it better reflects how people actually access their money in retirement, thousands of savers will continue to face unnecessary complexity and cash flow disruption,” he said. “In the meantime, careful planning and professional advice remain essential to avoid paying too much tax at the point of withdrawal.”
Retirees have now claimed back around £1.6 billion from overtaxation since 2015, when pension freedoms and flexible pension withdrawals were first introduced.
Why do some retirees get overcharged tax on their pensions?
Some people accidentally get taxed more than they should when they start flexibly withdrawing funds from their pensions.
The risk presents itself when you first access your pension pot. HMRC taxes your first withdrawal on a ‘month one’ basis, meaning it assumes you will withdraw the same amount every month for the rest of the tax year. An emergency tax code is applied at this stage.
But not everyone withdraws a regular income from their pension. Some retirees decide to make a large one-off withdrawal at the start of retirement, while others tap into their retirement pot as and when they need to.
This means HMRC’s assumption that you will withdraw the same amount from your pension every month is wrong, leading to additional taxes being incorrectly levied.
HMRC will usually set things straight at the end of the tax year without you having to do anything – however there are steps you can take to get your money back sooner, or to avoid being overcharged by a large amount in the first place
What to do if you think you are owed money from pension overtaxation
If you are taking a regular stream of income through pension drawdown, you shouldn’t need to do anything. HMRC should adjust your tax code throughout the year to ensure you have paid the correct amount of tax overall.
If you make a one-off withdrawal and think the taxman has taken more than needed, you can submit a form to reclaim the overpaid tax. You will need to select one of three forms, depending on whether or not you’re still working or receiving benefits and whether you’ve emptied your pot.
The forms can be found on the government website.
Provided your request is genuine and HMRC works out they incorrectly taxed you, you will get your money back within 30 days.
If you believe you were taxed too much but do not fill out the relevant forms, you will be left relying on HMRC to repay the tax overpayment at the end of the tax year.
