Pension savers could be owed thousands after paying too much tax - how to check

Taking money from your pension can be a big moment. You may have spent years building up your pot and finally reached the point where you want to use it.

But there is one thing that can catch people out. The amount of tax taken from your pension withdrawal isn't always the amount you'll ultimately owe.

HMRC says it paid back more than £44 million in tax refunds between January and March 2026 to people who had overpaid tax after flexibly accessing their pension savings. There were almost 14,000 claims during the three-month period.

The figures don't mean everyone taking money from a pension is being overtaxed. But they do show that pension tax can be surprisingly easy to get wrong, particularly when you first make a flexible withdrawal.

Why might you pay too much tax on your pension?

When you take money from a pension flexibly, the payment is taxable.

The problem is that HMRC may not yet know what your total income for the tax year will be when that first payment is made.

As a result, your pension provider may use an emergency tax code. This can mean more tax is deducted from your first payment than you eventually owe for the year.

It doesn't necessarily mean anything has gone wrong with your pension. It can simply be a temporary calculation while HMRC gets the information it needs.

For someone taking a large lump sum, though, the difference can be significant.

You don't necessarily have to wait for a refund

If you've been taxed too much, you may be able to claim the money back before the end of the tax year.

The form you need depends on what you've done with your pension.

If you've taken money from your pension but haven't emptied the pot, and you don't expect to take another payment before the end of the tax year, you may be able to claim using form P55.

If you've emptied your pension pot, you may need P53Z form instead.

And if you've stopped working, emptied your pension and have a P45 from your pension provider, form P50Z may apply.

HMRC has guidance explaining which form to use and what information you'll need to provide.

How do you know if you've paid too much?

Start with your pension paperwork.

Check how much you withdrew and how much income yax was taken from the payment.

You'll also need to think about your other income for the tax year. That could include employment income, your State Pension, other pensions, savings interest or other taxable income.

This matters because the amount of tax you should pay depends on your overall taxable income, not just the amount you've taken from your pension.

If you've only recently started drawing your pension, it can be difficult to know exactly what your final tax position will be. But if the tax deducted from a withdrawal looks surprisingly high, it's worth checking rather than assuming it's correct.

How much could you get back?

There isn't a standard refund.

It depends on your total income, how much you've withdrawn and how much tax has already been deducted.

The HMRC figures give an idea of the scale of the issue rather than what any individual person should expect. Between January and March 2026, almost 14,000 people made claims and HMRC refunded more than £44 million.

That works out at an average refund of around £3,166 per claim, although individual refunds will vary considerably.

So while you shouldn't assume you're owed thousands, a refund can be worth checking for if you've recently taken a flexible pension payment.

What happens if you don't claim?

If you've paid too much tax, you don't necessarily lose the money if you don't make an immediate claim.

HMRC can reconcile your tax position after the end of the tax year and issue a calculation showing whether you've paid too much or too little.

But if you're entitled to money back sooner, making an in-year claim could mean you get it back sooner rather than waiting.