Does my business have to do anything?

Nothing is required of you administratively. HMRC's August 2026 Employer Bulletin is explicit: employers and payroll teams do not need to apply, assess eligibility, amend payroll records or contact HMRC on behalf of anyone. There is no filing, no adjustment and no cost to the business. That is not the same as nothing to do. The letter asks low-paid staff to hand over bank details in response to unexpected contact about money they did not know they were owed, which is the exact shape of a scam they have been trained to ignore. Telling your team the letter is real, before it lands, is the useful thing an employer can do here.

How do I tell whether our workplace pension is net pay or relief at source?

Take one payslip for an employee in the scheme and compare gross pay with taxable pay. Under a net pay arrangement the pension deduction comes off before tax is worked out, so taxable pay is lower than gross pay by exactly the pension contribution. Under relief at source, taxable pay equals gross pay and the pension deduction sits further down with the other deductions from net pay. That single comparison settles it in about two minutes. Your payroll software will also show the basis in the pension scheme setup, and the scheme's own member booklet states it. If the payslip is ambiguous, ask the provider which basis the scheme operates on and get the answer in writing.

How much are my staff actually owed?

The BBC reports the typical payment is around £70, varying considerably with circumstances. The arithmetic behind that is the 20% basic rate relief on the contribution the employee made. On 2024 to 2025 auto-enrolment minimums, an employee on £11,500 contributes 5% of qualifying earnings of £5,260, which is £263, so the relief foregone is £52.60. Someone right at the £12,570 personal allowance contributes £316.50 and loses £63.30. A scheme calculating contributions on total pay rather than the qualifying earnings band pushes it higher: 5% of £12,000 is £600, and the relief foregone is £120. So roughly £50 to £120 a person a year, repeating for as long as they stay in that scheme on that salary.

How can my staff be sure the HMRC letter is not a scam?

Four checks, all from HMRC and the BBC's reporting. First, contact comes by post or through the personal tax account only — HMRC will not text, email or phone anyone about this payment, so any call or message is a scam. Second, HMRC will never ask for a PIN code or a password, and will never ask anyone to transfer money. Third, nobody needs to apply; eligible people are contacted automatically. Fourth, search GOV.UK for "check if a letter you've received from HMRC is genuine" and look for "Low Earner's Pension Payment". Bank details are given through the personal tax account. Anyone who cannot get online can phone HMRC to accept the payment instead.

Should we move our workplace pension to a relief at source scheme?

If any of your workforce earns below the personal allowance, relief at source is the better default, because every member gets the 20% top-up regardless of what tax they pay. For a workforce entirely above £12,570 the two bases produce the same outcome, and a net pay arrangement is marginally simpler because the relief is automatic rather than reclaimed. Do not switch on this point alone, though. Charges, default fund performance, the quality of the employer portal and how cleanly the scheme talks to your payroll software all matter more over a working life than £70 a year. Raise it at your next re-enrolment date, when you are reviewing the scheme anyway.

What employers should do about HMRC's £70 pension letters to a million low earners

Q: What is the low earner's pension payment?

It is a payment from HMRC that makes good the pension tax relief some low earners never received. Tax relief is delivered two ways. Under relief at source the pension provider claims 20% from HMRC and adds it to the pot whether or not the member pays income tax. Under a net pay arrangement the contribution comes off gross pay before tax is calculated, so the relief arrives as tax not paid — and someone earning under the £12,570 personal allowance pays no income tax, so no relief arrives at all. The payment applies from the 2024 to 2025 tax year onwards, with eligibility assessed separately each year. HMRC says it will contact around one million eligible people directly.

Reacting to: The £70 refund letter that isn't a scam (BBC News) →

HMRC's line to employers on this is that no action is required. Administratively that is correct. Practically it is the wrong advice, and I think following it will cost the people the scheme is meant to help.

Over the next few months HMRC will write to around a million people — mostly women, mostly of working age, mostly part-time — to say they are owed a pension top-up, typically about £70, and to ask them to hand over their bank details through their personal tax account. Every fraud warning those people have ever received says that an unexpected letter about money you did not know you were owed, asking for bank details, is a scam. This one is not. The gap between those two facts is where the money will quietly get lost, and on payroll matters the person most of those employees actually trust is their employer.

What the payment is, and why nobody noticed losing it

Pension tax relief reaches you through one of two plumbing arrangements, and which one you are on is decided by your employer, not by you.

Under relief at source, the contribution comes out of pay after tax, and the pension provider then claims 20% back from HMRC and adds it to the pot. That happens whether or not the member pays any income tax at all.

Under a net pay arrangement, the contribution comes off gross pay before tax is calculated, so the relief arrives as tax you never paid. That works perfectly — until the member earns less than the £12,570 personal allowance and pays no income tax in the first place. There is no tax to save, so no relief arrives.

Same job, same salary, same 8% auto-enrolment minimum, different outcome, entirely because of which scheme the employer signed up to. As the BBC puts it, employees have no control over the type of scheme that is used. The government has now accepted that and legislated to make up the difference, calling it the low earner's pension payment.

Worked example: what it is actually worth

Illustrative business, real rates. For 2024/25 the auto-enrolment qualifying earnings band runs from £6,240 to £50,270, with a minimum employee contribution of 5% and employer contribution of 3%.

Take a café with nine staff, four of them part-time on £11,500 a year.

	Relief at source	Net pay arrangement
Salary	£11,500	£11,500
Qualifying earnings	£5,260	£5,260
Employee contribution at 5%	£263.00	£263.00
Tax relief actually received	£52.60	nil
Cost to the employee	£210.40	£263.00

So £52.60 a year each, and £210.40 a year across those four part-timers — money the staff of one small café were paying that identical staff at the shop next door were not.

The closer someone sits to the personal allowance, the more they lose. On £12,570 the qualifying earnings are £6,330, the 5% contribution is £316.50, and the relief foregone is £63.30. That is where the BBC's "typically £70" comes from. And a scheme that calculates contributions on total pay rather than on the qualifying earnings band pushes it higher again: 5% of £12,000 is £600, so the relief foregone is £120.

Roughly £50 to £120 a person a year — and it repeats for as long as they stay on that salary in that scheme.

Not life-changing. Also not nothing, on wages at that level.

Where employers genuinely stand

HMRC's August 2026 Employer Bulletin is unambiguous: employers and payroll teams do not need to apply, assess eligibility, amend payroll records or contact HMRC on anyone's behalf. There is no filing, no adjustment, and no cost to the business. If staff ask, HMRC's line is to reassure them that it will be in touch with those who qualify.

All true. It is still not the same as "nothing to do", because three things are worth ten minutes of an owner's time.

The payslip test, in two minutes

Take any payslip for someone in your workplace pension and compare gross pay with taxable pay.

Net pay arrangement — taxable pay is lower than gross pay by exactly the pension deduction. The pension came off before tax was worked out.
Relief at source — taxable pay equals gross pay, and the pension sits further down with the other deductions from net pay.

That settles it. Your payroll software also shows the basis in the pension scheme setup, and the scheme's member booklet states it in plain terms. If the payslip is genuinely ambiguous, ask the provider which basis the scheme operates on and get the answer in writing. This is the sort of thing we look at as a matter of course when we take on a payroll and pensions client, because it changes what the staff take home.

What to tell your staff before the letter arrives

This is the part that matters, and it costs nothing. Five facts, all from HMRC and the BBC's reporting:

Nobody has to apply. Everyone eligible is contacted automatically, by post or through their personal tax account.
HMRC will not text, email or phone about this. Any call or message claiming to be about it is a scam.
HMRC will never ask for a PIN or a password, and will never ask anyone to transfer money.
Bank details are given through the personal tax account, not by replying to anyone. Anyone who cannot get online can phone HMRC to accept the payment instead.
The letter can be verified. Search GOV.UK for "check if a letter you've received from HMRC is genuine" and look for "Low Earner's Pension Payment".

A paragraph on the payslip run or the staff noticeboard does the job. If you have people who are digitally excluded or who would simply bin an unexpected brown envelope, say it to them directly.

What is still uncertain, and when we will know

Timing. HMRC originally intended to start contacting people in August 2026. That slipped. Payments for 2024/25 contributions now begin over the coming months, phased, expanding across the rest of this year and into early 2027. There is no published date for when any individual hears, so this is a "watch the post until early 2027" job rather than a diary date.

Take-up. Sir Steve Webb, partner at pensions consultancy LCP and a former pensions minister, told the BBC he was shocked at how few people the government expects to actually receive the payment, and that the cost has been estimated well below full take-up. "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 said. That is the number to watch, and it is the reason the two-minute conversation with your team is worth having.

Later years. The payment applies from 2024/25 onwards, with eligibility assessed separately each year, and the BBC reports that automated annual payments for people in the same position in later years could follow. Nothing before 2024/25 is being made good — if you had part-time staff in a net pay scheme in 2022/23, that relief is simply gone.

The mechanics are settled. The Registered Pension Schemes (Net Pay Arrangements) Regulations 2026, SI 2026/671, were laid before Parliament on 23 June 2026. They keep the payment out of benefit entitlement calculations and out of National Insurance reporting, so it does not create a knock-on problem for anyone receiving it.

Three things to do this week

Run the payslip test on one employee earning under £12,570. Five minutes, and it tells you whether this affects your team at all.
If you are on a net pay arrangement, warn your staff now, using the five facts above. Before the letter lands beats after it has been thrown away.
If you are setting up a scheme or approaching re-enrolment, ask the provider directly which basis it operates. Where any of your workforce earns below the personal allowance, relief at source is the safer default — though charges, fund performance and how cleanly the scheme talks to your payroll matter more over a working life than £70 a year.

None of this is a filing obligation, and none of it earns the business a penny. It is the kind of thing that quietly separates an employer people stay with from one they do not. If you would rather someone else kept an eye on it, that is what our payroll and pensions service is for, and it sits inside the accountancy packages most of our small business clients are on. Or tell us what is going on and we will come back to you the same working day.

Sources: BBC News, "The £70 refund letter that isn't a scam", 7 September 2026; HMRC's Employer Bulletin August 2026 and Pension schemes newsletter 184; auto-enrolment thresholds and minimum contributions from GOV.UK workplace pensions. Personal allowance £12,570. Correct at 7 September 2026.