The UK government is to give an annual payment of £70 to approximately one million individuals in net-pay schemes.
People earning £10,000 or more are automatically enrolled into a pension, but this figure is below the £12,570 personal allowance threshold for paying income tax, creating an imbalance that HMRC has since promised to rectify.
The changes took legal effect from April 2024. But payments of £70 each due to a million of these low earners in net-pay pension schemes were delayed by over a year because of IT and administration issues.
HMRC has confirmed that it will start writing to eligible individuals over the summer and ask them to share their bank details, with the payouts to be completed by the end of 2026. Customers do not need to contact HMRC directly, but have been urged to ensure their details are correct by updating their Personal Tax Account.
Also to ensure that the IT solution offers value for money and reduces disproportionate negative impacts on benefit entitlement and NICs obligations, ministers agreed to legislate to simplify this policy. This change and the updated IT solution mean that top-up payments for individuals for the 2024-25 tax year will be made in 2026, so some recipients will receive £140 as an initial first payment.
Previous government projections had predicted IT and operating costs of £38m to implement the policy. In 2023 the Government predicted an estimated cost to the Treasury of £10m in 2025/2026, rising to £15m in 2026/2027.