HM Revenue and Customs (HMRC) is set to write to thousands of people explaining they are eligible for top-up payments.
Low earners who saved into workplace pensions could get about £70 - although the amount will vary depending on individual circumstances.
Those who could be entitled to the money have saved into workplace pensions but they missed out on pension tax relief because of the way the pension was administered.
Over the next few months HMRC will be sending out the letter.
However, there are a few checks to make sure the letter is genuine.
Who is entitled to a refund?
Normally when a pension is paid into, the government gives tax relief by allowing some of the money that would have been paid in tax to go towards a pension instead.
But in some cases those on a low income, who earn less than £12,570 a year, will be automatically enrolled into a workplace pension where they won’t receive tax relief on contributions. This is known as a Net Pay Arrangement pension scheme.
Because automatic enrollment in workplace pensions starts when a person earns more than £10,000, Net Pay Arrangement causes tax issues for those who earn between £10,000 and £12,570 a year.
Because £12,570 a year is the threshold at which you start paying income tax, those in this bracket will miss out on tax relief on pension contributions.
This however does not affect people who make contributions from their take-home pay and HMRC adds basic-rate tax relief.
This payment makes sure low earners achieve similar outcomes regardless of the type of workplace pension scheme they are in.
According to HMRC, women are estimated to make up 75 per cent of those eligible for the money.
How can you tell if the letter is real?
Those who think they are eligible for the repayment, don’t need to contact HMRC instead they will be contacted via a letter.
HMRC will not text, call or email about the payment and a call or message is likely to be a scam.
Those who are eligible will also be asked to provide their bank details through their Personal Tax Account to receive the payment. HMRC will only ask for these details through PTA, helping customers identify genuine contact and avoid scams.
Customers can also check their letter is not a scam by searching Gov.uk for "check if a letter you've received from HMRC is genuine", and look for "Low Earner's Pension Payment".
An HMRC spokesperson said: “Customers don’t need to apply or contact us – we’ll send them information about how to receive their payment via post or their online tax account. We know some people may be cautious about unexpected contact, which is why we provide clear information about what to expect and how to verify the contact is genuine.
“Customers can check a letter is genuine on GOV.UK and should only respond via official HMRC channels. We’ll never ask for passwords, PINs or money to be transferred to claim a payment.”
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