Tax Action tips: Claiming tax relief on your personal pension contributions
Are you missing out on your pension tax relief? It is estimated that around 250,000 higher rate taxpayers are failing to make the most of their tax relief because they mistakenly believe they receive it automatically.
Did you know if you are a higher or additional rate taxpayer you are entitled to claim additional relief on your personal pension? People often think they will automatically receive their higher rate tax relief, however only basic-rate relief gets automatically added to your pension contributions. You can claim the additional relief by declaring your pension contributions on your annual tax returns, which could save you either 20% or 30% – depending on your rate of tax.
If you are part of an employer scheme which is a final salary or occupational money purchase scheme, you don’t need to worry about claiming the additional relief as the pension company will do this automatically. In general taxpayers contributing to stakeholder, group personal or personal pensions schemes that they pay into can claim the extra 20% or 30%.
To find out how much tax you could be wasting, try unbiased.co.uk’s tax waste calculator – you might be surprised!