THOUSANDS of pensioners have reclaimed more than £10,000 each after being overcharged tax on pension withdrawals, new analysis has revealed.

Figures obtained by insurance and pensions firm Royal London via a freedom of information request show that nearly 60,000 pension savers claimed tax refunds in 2023-24, up 20 per cent on the previous year.

About 11,700 people received more than £5,000 back, including 2,400 refunded over £10,000. A handful reclaimed over £100,000, with the top 25 refunds averaging £106,900.

The system of “emergency” taxation applies when pensioners make one-off withdrawals from their defined contribution pots. HM Revenue & Customs assumes the withdrawal is a regular monthly income, meaning tax is overpaid unless individuals later claim it back.

Royal London said the average refund last year was £3,342: up £280 on 2022-23.

The firm’s pensions expert Clare Moffat said: “HMRC recently announced an overhaul of its emergency taxing codes on pensions, which it promises will deliver quicker refunds. But that doesn’t mean people won’t still be charged the higher rate in the first place.”

She warned that looming inheritance tax changes could prompt more lump-sum withdrawals, increasing the likelihood of future overcharging.

A spokesman for HMRC said: “Ultimately, nobody overpays tax as a result of taking advantage of pension flexibility.

“We will repay anyone who pays too much because they’re on an emergency tax code and individuals can claim a repayment much earlier if they wish.”