As part of the employers bulletin June 2026 articles, the HM Revenue and Customs (HMRC) has issued information on the Low Earners Pension Payment (LEPP).
Contact imminent
From August 2026, HMRC will be contacting around 1 million eligible individuals directly about the low earner’s pension payment, previously referred to as the low earner’s anomaly. This payment makes sure low earners achieve similar outcomes regardless of the type of workplace pension scheme they are in.
What this means for employers
Employers do not need to take any action. There is no requirement for employers or payroll teams to apply, assess eligibility, amend payroll records, or contact HMRC on behalf of employees.
HMRC will identify eligible individuals and contact them directly.
Who may be eligible
HMRC indicate that an employee may be eligible if they did not obtain income tax relief on their pension contributions in any tax year from 2024 to 2025 onwards. This would be if they meet both these conditions:
- earned up to the personal allowance in a tax year, typically £12,570
- contributed to a workplace pension through a Net Pay Arrangement Pension Scheme (NPA)
HMRC is to assess eligibility separately for each tax year, and individuals may qualify for one or more years, from 2024 to 2025 onwards.
Employers do not need to assess eligibility or confirm pension arrangements for employees as part of this process.
What employees should do
Individuals do not need to contact HMRC to receive a payment.
If employees approach with questions, the employer can reassure them that:
- eligible individuals should wait to be contacted by HMRC, either by post or through their personal tax account
- once they have received contact, eligible individuals should follow the instructions provided by HMRC to accept their payment
Fraud and scam awareness
As HMRC will be contacting individuals about money they are owed, employers may receive questions about whether messages are genuine. Employees can be reassured that:
- HMRC correspondence can be checked on GOV.UK by searching check if an email you’ve received from HMRC is genuine — low earner’s pension payment can be found from August 2026
- HMRC will never ask for money transfers, PIN codes, or passwords
Opinion
The LEPP has been introduced to overcome a claimed anomaly on tax reliefs between the Net Pay Arrangement (NPA – before tax contributions) and Relief At Source (RAS – after tax contributions).
Putting aside the confusion on terminology which leads to high inaccuracy of operation by some employers, the claim was that NPA denied tax reliefs to low earners who pay no tax, whereas RAS results in a 25% top-up whether the contributor was paying any tax or not.
NPA was the original employer occupational scheme operation of tax reliefs, however, they relief is based on the employees own prevailing tax rates for low earners that was zero. in someways the effect applies to those who are in salary sacrifice schemes also as contributions are employer only.
For some years now with and since the introduction of stakeholder pension schemes, newer schemes often fell under RAS, where no tax relief was provided in the payroll calculation, but a 25% top-up was claimed. Y the pension schemes often fell no matter the earnings level or tax rate the employee actually paid. This type of scheme was considered more beneficial those who pad no tax on low earnings.
This LEPP provides an added amount of contributions where the employee is in a NPA pension scheme but paid no tax.
PAYadvice.UK 19/6/2026