- If you are a higher earner, you could be missing out on a chunky tax rebate on your pension contributions.
- These refunds are so little known and understood that recent research found some of the UK's top paid people lost out on a staggering total of £1.3billion between 2016 and 2021.
- Three quarters of eligible higher rate taxpayers on £50,270-plus a year, and half of additional rate taxpayers raking in £150,000-plus, failed to claim the pension tax relief they were due.
- Whether or not you are owed a pension tax relief refund depends on your earnings, pension contributions and what kind of pension scheme you are in.
- If you are due a refund it will be paid direct to you by HMRC, not into your pension scheme, though you will then be free to do what you like with it, including ploughing it into your pension in future.
- You can sort out claims on pension contributions made in 2022/23 after the start of the new tax year on 6 April.
- It is worth noting that many more people are going to be pushed into higher tax brackets as their salary increases over the next few years.
- Many are likely to consider putting extra into their pensions to reduce their pay and therefore their tax burden.
If you are going to be owed a pension tax relief refund, it is worth knowing the 7 process you need to follow:
- What kind of taxpayer are you?
- What kind of pension scheme are you in?
- If you need to claim, do you want to do this via a change to your tax code or a self-assessment tax return?
- Have you got evidence of your contributions in case HMRC asks to see it?
- Do you need to backdate claims for previous years?
- What are the usual tax deadlines you need to be aware of?
- Do you need an accountant/Financial Adviser to help you?
