Date posted: 3rd May 2024
In simple terms, you may be missing out on tax relief by not realising that you need to claim a higher amount of pension tax relief, if you are a higher rate taxpayer.
In addition, the contributions may help reduce the impact of child benefit repayments or keep you below the £100,000 threshold, at which point you may be paying 60% tax!
You may be entitled to further tax relief if:
- You received income of over c£50,000.
- You are paying into a pension – possibly via your employer’s payroll scheme.
- The pension contributions are taken from your pay, after tax has been calculated.
There are different tax treatments depending upon how employers deal with the pension contributions. Some may deduct the pension contributions from gross pay (either via a historic set up with the pension scheme or via salary sacrifice), which means that you will more than likely have received the full tax relief at source, meaning no further relief is due.
However, if the pension contribution is deducted from your net pay, then you may be entitled to further relief, which you will need to seek direct from HMRC via either a letter or if appropriate, a self assessment tax return.
The difficulty will be finding out which relief has been applied. Your employer should be able to advise but if not, we would be able to ascertain the position from reviewing your payslip.
You also have four years to claim relief. So, if you paid into a pension during the year to 5 April 2021, then you can still make a claim for relief, as long as this is submitted to HMRC by 5 April 2025.
If you have any queries regarding pension taxes, please give us a call.
