State pensioners and retirees who have flexibly accessed their pension are being urged to check whether they are owed a tax refund from HMRC. New data reveals that between April and June 2026, more than 12,500 people reclaimed tax after taking flexible pension payments, with HMRC repaying over £50.3 million to those who had overpaid.
Average repayment stands at nearly £4,000
The average repayment amount is approximately £4,000, a significant sum for retirees who often find themselves out of pocket while waiting for HMRC to return their own money. The issue stems from emergency tax codes being applied to the first flexible pension payment, which can result in individuals paying far more tax than they actually owe.
Adam Cole, retirement specialist at Quilter, commented: “HMRC’s latest figures show that between April and June 2026 more than 12,500 people had to reclaim tax after accessing their pension flexibly, with more than £50.3m repaid in the second quarter of the year. While the number of reclaim forms is down marginally compared with the same period last year, the total amount repaid has jumped by nearly £2m.
Retirees left out of pocket
“The average repayment stands at almost £4,000, not an insignificant amount of money, and is money that could be put to work sooner and to better use. 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.”
Mr Cole continued: “All of this is happening at a time when pressures are rising on retirees, despite the triple lock. The new government has backed away for now from the idea that the personal allowance should be unfrozen and uplifted, a move that would help pensioners and reduce their administrative burden given how close the state pension is to that allowance.
Emergency tax codes cause overpayment
“As emergency tax codes are applied to the first payment of a flexibly accessed pension this continues to mean a mismatch between the tax deducted and what is actually owed.”
The data highlights a persistent issue for pension savers, many of whom are unaware they can reclaim overpaid tax. HMRC’s repayment process, while functional, adds an unnecessary delay for retirees who rely on their pension income.
How to check if you're owed a refund
Pensioners who have flexibly accessed their pension and believe they may have been overtaxed are encouraged to contact HMRC or use the online tax repayment service. Checking P60s, tax codes, and pension statements can help identify discrepancies. The average refund of £4,000 could make a substantial difference to household budgets, especially amid rising living costs.
With the second quarter of 2026 showing a near £2m increase in total repayments compared to the same period last year, the problem shows no signs of abating. Experts advise retirees to be proactive in reviewing their tax affairs to ensure they are not missing out on money owed to them.
