Following any email of 9th July HMRC has written to provide an update on the delivery of the Low Earner’s Pension Payment (LEPP). It arrived early in August
Yet another delay in the tax-man paying back pension payments
They updated a working group earlier this year, and industry more recently via its Employer Bulletin on GOV.UK, that HMRC would begin offering payments from August 2026. It being August 16th , I had hoped to show what people affected by the Net Pay problem would get paid to them the savings incentives that haven’t been paid to them starting from 2014.
They tell us that they have now finalised testing and have an updated delivery schedule which they wanted to make us aware of. They plan to begin offering payments not as promised in August but from September 2026, following a phased schedule which will start with a limited cohort of customers for live testing and service assurance. This controlled approach will allow them (they say)
“to test the service in a live environment, identify, and address any issues at an early stage, and ensure that the full rollout is delivered as smoothly as possible for customers”.
Subject to the successful completion of testing and assurance activity, theye will then move to a wider rollout towards the end of 2026, with the vast majority of customer letters expected to be issued in early 2027.
HMRC tell us these payments have been long awaited. The former payroll director of Marks and Spencer (and now a trustee of its pension scheme) is now 12 years into this campaign and could be forgiven to be tearing her hair out!
This business was legislated for several years ago and the payment of money to those who missed out on the incentives can expect a backdated payment to 2024 but that will be three years later than expected. What is more, there will be no repayment of incentives for the period which for some could be from 2014 to 2024.
HMRC concludes they
can assure you that the government remains committed to delivering the policy and ensuring that eligible individuals receive the payments to which they are entitled.
We hope so . For a full story of this saga of lethargy and insouciance in the face of the financial problems of those on lowest incomes auto-enrolled into workplace pensions.
Most of those who are impacted have no understanding of what’s owed them, many of them may have had to opt-out of workplace pensions as they are too expensive. Those few who know something of this will be low-earners out of choice, primarily being part-timers for whom earnings are not all that they are working for.
We should not suppose that most low-earners are voluntarily so. Most are indeed part-timers but they cannot work more than part-time, often because they are voluntarily caring, often not having the physical capacity to work full time and a few in minimum wage work without regular hours.
This scandal should be brought to the notice of the Pensions Commission.
Employers can’t keep up!
This is the circular that employers were asked to roll out to staff (this one for LGPS staff is now out of date. For August read some time in the future.
HMRC pension payments for lower earners
This news article was published on 03 Jul 2026
From August 2026, HMRC will begin contacting around one million people who may be entitled to a low earner’s pension payment.
The payment is designed to help lower earners who have missed out on pension tax relief because of the way their workplace pension scheme operates.
The LGPS operates a net pay arrangement. This means pension contributions are taken from your pay before income tax is worked out.
What is the low earner’s pension payment?
For most members, this means they automatically receive tax relief on their pension contributions. However, some lower earners do not benefit from this tax relief because their earnings are too low to pay income tax
The low earner’s pension payment has been introduced to address this. It provides a payment to eligible low earners that is equivalent to the tax relief available to members of pension schemes that use a different method of giving pension tax relief.
Could I be eligible?
You may be entitled to a payment if, from the 2024/25 tax year onwards, you:
- paid contributions to the LGPS or another workplace pension scheme that uses a net pay arrangement, and
- did not receive tax relief on those contributions because you did not pay income tax.
HMRC will assess eligibility for each tax year separately, so some people may qualify for payments for more than one year.
Do I need to apply?
No. If you are eligible, HMRC will contact you directly. You do not need to apply for the payment or contact HMRC to ask for it.
HMRC will write to eligible individuals or contact them through their Personal Tax Account with details of how to receive the payment.
Watch out for scams
As HMRC will be contacting people about money they may be owed, fraudsters may try to take advantage of the situation.
Remember:
- HMRC will never ask you to transfer money to them to receive a payment
- HMRC will never ask for your PIN numbers or passwords
- If you are unsure whether a message is genuine, you can search check if an email you’ve received from HMRC is genuine – GOV.UK – the subject ‘low earner’s pensions payment’ will be included in the list from August 2026.
If you think you may be eligible, there is nothing you need to do at this stage. Simply wait to hear directly from HMRC from August 2026 onwards.
