Could you be missing out on pensions tax relief?

With the deadline for Self-Assessment tax returns looming it has come to light that many individuals, who pay the higher rate of income tax, could be missing out on important reliefs when it comes to their pensions.

Who does the relief apply to?

This tax relief applies to all pension savers, however those who are in the higher wage bracket could be missing out as the relief is not automatically applied.

Pension contributions are automatically afforded the relief if the:

• employer takes workplace pension contributions out of your pay before deducting Income Tax
• rate of Income Tax is 20% - your pension provider will claim it as tax relief and add it to your pension pot (‘relief at source’) (GOV.co.uk)

If you do not meet these criteria it is imperative that you list your pension contributions on your self-assessment tax return.

What can I claim?

HMRC state that, on your self-assessment tax return, there is potential to claim relief of:

• 20% up to the amount of any income you have paid 40% tax on
• 25% up to the amount of any income you have paid 45% tax on

Alternatively those who pay income tax at 40% can contact HMRC directly to claim.

What should I do next?

For more information contact our dedicated payroll or tax teams by submitting an enquiry.