Source: Kevin Peachey, cost of living correspondent, BBC News, “The £70 refund letter that isn’t a scam”, published 7 September 2026. The mechanics below are taken from HMRC’s pension schemes newsletter 184 (27 August 2026) and the Government’s policy paper on relief relating to net pay arrangements (15 March 2023).
Our view, before the detail
The money in this story is not in dispute. It is legislated, it is budgeted, and nobody has to apply for it — the 2023 policy paper puts a duty on HMRC, so far as is reasonably practicable, to pay it. What is in dispute is whether people will actually take it, because of how it arrives: an unexpected letter from the tax office, asking for your bank details. That is the precise shape of every scam warning anyone has ever been given, and the people most likely to receive one are part-time workers earning under £12,570 who have never had a reason to talk to HMRC in their lives.
The Government’s own arithmetic says it expects this to go badly. The published costing for the measure puts the cost to the Exchequer at £10 million in 2025-26 and £15 million in 2026-27, figures originally set out in Table 5.1 of the Autumn Budget and Spending Review 2021. At the £70 average HMRC has given the BBC, £10 million funds roughly 143,000 payments. HMRC expects around a million people to be eligible. Sir Steve Webb, a partner at pensions consultancy LCP and a former pensions minister, told the BBC he was shocked at how few people the Government expected to receive the payment, and warned of “a real risk of huge non take-up”.
What went wrong in the first place
There are two ways a workplace pension can collect tax relief, and employees have no say over which one their employer picked.
Under relief at source, your contribution comes out of pay that has already been taxed, and the pension provider then reclaims 20% from HMRC and adds it to your pot. Crucially, that happens whether or not you actually paid any tax. Someone earning £11,000 gets the 20% top-up exactly like someone earning £40,000.
Under a net pay arrangement, the contribution is taken off your pay before tax is calculated, so the relief comes through as a lower tax bill. That works perfectly if you pay tax. If your income is below the personal allowance, £12,570 in 2024-25 and still £12,570 today, your tax bill is already nil. There is nothing to reduce, so the relief is worth 0%.
Same job, same pay, same contribution, less money — determined entirely by an administrative choice made by an employer, usually years earlier, that the employee was never consulted on. The Government accepted that this was an anomaly, legislated to fix it from the 2024-25 tax year, and has now built the machinery to pay it. The August 2026 pension schemes newsletter confirms eligibility is assessed separately for each tax year, so this is not a one-off — it should keep happening.
What it is actually worth
Illustrative figures for the 2024-25 tax year, the year the first payment covers. Built on published rates: personal allowance £12,570, auto-enrolment qualifying earnings band £6,240 to £50,270 for 2024-25 (DWP held the lower limit at £6,240 in its annual review), minimum employee contribution 5%.
- Her qualifying earnings are £11,800 − £6,240 = £5,560.
- At 5%, her own contribution for the year is £278.00.
- Her employer uses a net pay arrangement. Her income is below £12,570, so her marginal rate is 0% and the whole £278.00 comes straight out of her take-home pay.
- Had her employer used relief at source, the same £278.00 would have landed in her pot for a cost to her of £222.40, with HMRC adding £55.60.
So her low earner’s pension payment is £55.60 — roughly a week of food shopping, for a woman on £227 a week, that she has already paid for and never knew she was missing.
HMRC’s typical figure is higher, at £70, and the gap is worth understanding. Many employers certify contributions on total pay rather than the qualifying-earnings slice. On the same £11,800 at 5% of everything, the contribution is £590 and the missing relief is £118. Your own number depends entirely on what your scheme contributes on, and what you earned that year. Anyone contributing more than the minimum will be owed more.
The part that matters most: telling it from a scam
HMRC has been explicit that it will not text, email or telephone anyone about this payment. Contact comes by post, or through your personal tax account. HMRC will never ask you to transfer money, and never asks for PIN codes or passwords. If you get a call or a text about a pension top-up, it is a scam, full stop.
The genuine route runs the other way: you log into your own personal tax account on GOV.UK, and provide your bank details there. Anyone who cannot get online can accept the payment by phoning HMRC instead.
One practical wrinkle we checked on the morning of 7 September 2026: HMRC’s list of genuine letters did not yet include the low earner’s pension payment. That page is updated as campaigns go out, so it should appear — but until it does, the reliable check is your own personal tax account rather than the letter itself. If what the letter says matches what you see when you log in through GOV.UK, it is real. Never use a link, phone number or QR code printed on a letter to verify that same letter.
Who is most likely to be owed this
Roughly a million people, and HMRC says most of them are women. That is not a coincidence. The eligible group is people who were auto-enrolled into a workplace pension while earning close to but under the personal allowance — which in practice means part-time work in retail, hospitality, care, cleaning, school support and admin, and people who worked part of the year around caring responsibilities. It also catches anyone who had two part-time jobs, or who started or left a job mid-year.
Almost everyone eligible is of working age rather than retired. If you earned under £12,570 in the 2024-25 tax year and had pension contributions coming off your payslip, you are in the frame — and so is the person in your family you have just thought of while reading that sentence. Telling them is genuinely the highest-value thing you can do with this article.
Three things to do this week
- Look at a payslip and work out which scheme you are in. If the pension deduction is taken off before the taxable pay figure, that is a net pay arrangement. If it comes out of pay that has already been taxed, that is relief at source. If the payslip is not clear, one line to payroll settles it: “Does our workplace pension use a net pay arrangement or relief at source?” Our payslip guide shows you where to look.
- Set up your personal tax account now, before any letter arrives. Go to gov.uk/personal-tax-account. It takes about ten minutes with a passport or a payslip to hand. Doing it in advance means that when the letter turns up you can verify and accept it in one sitting, instead of standing in your kitchen wondering whether to bin it.
- Warn the person most likely to get one. The failure mode here is not fraud, it is a genuine letter going in the recycling. If someone in your household or family works part-time on low pay, tell them now that a real HMRC letter is coming, and that HMRC will never ring or text about it.
If a letter has already arrived and you think it might be fake, report it through GOV.UK’s reporting service rather than replying to it.
What is still unsettled
HMRC has said the rollout is deliberately phased, expanding “over the remainder of the year and into early 2027”, and it has published no schedule for who gets contacted when. So there is no date to diarise and no queue to join: individuals are told not to contact HMRC, and employers, payroll teams and pension scheme administrators have been told they do not need to apply, assess eligibility or amend payroll records on anyone’s behalf.
Two further things are settled but worth knowing. The Registered Pension Schemes (Net Pay Arrangements) Regulations 2026, laid before Parliament on 23 June 2026, make sure these payments do not affect entitlement to benefits and create no National Insurance reporting. And the payment is itself chargeable to income tax — which for someone whose income sits well below £12,570 will not normally produce a bill, but is worth knowing if you are close to the line.
What nobody can tell you yet is whether the take-up problem gets solved. HMRC says it will run an awareness campaign on social media and other channels. On the published costing, it is planning for a fraction of the eligible million to come forward. That gap is the story here, and it is one the rest of us can close a bit by talking about it.
If this has made you want to look properly at what your pension is doing rather than just this one payment, our pension reality check covers the employer match, the tax relief and the twenty-minute annual MOT. And if money is tight enough that a £70 payment matters this month, free, independent help is available today from MoneyHelper, StepChange and National Debtline.