At the moment withdrawals through pension drawdown are taxed at an emergency rate, resulting in millions of pounds in overpaid tax.

In the first six months 2023, £104m was refunded in overpaid tax affecting over 30,000 people who had drawn down funds from pension pots, HMRC figures showed. The average refund was £3,551.

It is important to take action if you have paid too much income tax on a flexibly accessed pension payment by claiming a refund if either the pension pot has been flexibly accessed but not emptied; you will not be taking regular or flexible payments before the end of the tax year; and the pension provider is unable to make a tax refund.