HMRC confirms £70 September top-up payments ‘genuine’ as 1m people sent letters

HMRC confirms £70 September top-up payments ‘genuine’ as 1m people sent letters Tax collector said more than 1 million impacted with key earnings figure £12,570 People are currently getting letters through the door from HM Revenue and Customs, officials have confirmed. Anyone getting it through the door has been told not to bin it as a potential scam - and 1 million are being sent out. The tax authority is contacting individuals to inform them they are entitled to a rebate. Those entitled are low earners who have missed out on the money because of the way the pension they pay into is administered. HM Revenue and Customs (HMRC) will write to people over the next few months, explaining how to receive the payment. Typically they will be due £70, but that may vary considerably. The government department said the money was going to low earners who have missed out on tax relief, with 75% of recipients believed to be women. Some low earners whose employer used what’s known as a Net Pay Arrangement pension scheme received less than those whose pension was administered through a Relief at Source scheme. Employees have no control over the type of scheme that’s used, so the government has decided to make up the difference to those who have missed out, through what’s called a low earner’s pension payment. Typically, to qualify, they would have earned close to, but not more than, £12,570 a year (the starting point for paying income tax). As a result of not being taxpayers, then cannot have their tax bill reduced so they will receive a payment instead. Former pensions minister Steve Webb warned: “The process of getting these payments to the right people is going to be incredibly painful, and there is a real risk of huge non-take-up.” He added: “Most people will not have a clue about this issue and may be suspicious of a letter out of the blue from HMRC offering them free money. Some may suspect it is a scam. “The process of getting these payments to the right people is going to be incredibly painful and there is a real risk of huge non take-up. “It is vital that communications are effective to make sure that people get the money to which they are entitled.” The letter-writing campaign kicks off this month and is expected to continue through to 2027. Roughly one million people will receive correspondence from HM Revenue and Customs this month, with the key income threshold for those affected sitting at around £12,570. The letter concerns the new Low Earner’s Pension Payment. The scheme aims to address a longstanding disparity that left some lower-income workers without pension tax relief, purely as a result of the type of workplace pension scheme their employer operated. Individuals potentially impacted generally earned approximately the £12,570 Personal Allowance and contributed to pensions through schemes utilising a net pay arrangement. HMRC will evaluate eligibility individually for each tax year from 2024/25 forward, which means certain employees may ultimately receive payments covering multiple years. Thomas Drury, money-saving expert at The Investors Centre, is urging employees not to disregard the correspondence as inapplicable, especially if their earnings fall below the Income Tax threshold. “The confusing part is that many of the people affected may reasonably think pension tax relief has nothing to do with them because they don’t earn enough to pay Income Tax. But that is exactly why this issue exists. “There are different ways workplace pension schemes administer tax relief. Under relief at source, a pension provider can add basic-rate tax relief to someone’s pension even where that worker doesn’t actually earn enough to pay Income Tax. “Under a net pay arrangement, contributions are taken from earnings before Income Tax is calculated. That works well for someone who actually pays tax because their taxable pay is reduced. But if your income is already below the Personal Allowance, reducing your taxable income may give you”. Government guidance clarifies that workers enrolled in relief-at-source pension schemes are entitled to a 20% top-up even if they pay no Income Tax. By contrast, lower earners in net pay arrangements have historically only received relief at their marginal tax rate, which could effectively amount to 0%. The Government has previously estimated that approximately 1.2 million people could be affected by this underlying issue, with women anticipated to account for around 75% of those earning below the Personal Allowance while contributing through net pay arrangements. Crucially, workers are not required to submit an initial application or determine their own eligibility. HMRC has confirmed it will identify those who qualify using existing information it holds, contacting them either by post or via their Personal Tax Account. Eligible individuals will simply need to follow the instructions provided to claim their payment. “You don’t need to ring HMRC and ask to be added to a list, and you don’t need to pay a company to find out whether you’re eligible. “If you think this might apply to you because you earned around £12,570 and contributed to a workplace pension, the sensible step is to make sure HMRC has your correct contact information and then watch for official correspondence. “Don’t throw the letter away because you assume anything from HMRC must be asking you for tax. In this instance, HMRC could actually be contacting you because it owes you money. “It is also worth checking your Personal Tax Account rather than relying entirely on the post, particularly if you have moved house since the 2024/25 tax year.” HMRC says it will run an awareness campaign using social media and other channels.