£1.3 BILLION PENSION TAX RELIEFT UNCLAIMED BY PENSION SAVERS OVER A FIVE-YEAR PERIOD

According to recent research, higher rate and additional rate taxpayers in the UK leave millions of pounds of pension tax relief unclaimed yearly [1]. This amounts to a staggering total of £1.3 billions over a 5-year period. This unclaimed money could be in your pocket instead.

Pension tax relief is a government incentive to encourage individuals to save for retirement. It boosts your pension contributions based on your income level, the amount which is being contributed and the type of pension scheme you have. The two main methods of receiving tax relief are relief at source and net pay.

BOOST YOUR RETIREMENT SAVINGS

Understanding how pension tax relief works is important, and seeking professional financial advice ensures you claim everything you’re entitled to. Depending on your tax bracket, you may be eligible for 20%, 40% or even 45% tax relief on your pension contributions. Taking advantage of this relief can significantly boost your retirement savings.

If you are a higher rate or additional rate taxpayer, reviewing your pension contributions and ensuring you maximise your tax relief benefits is essential. Doing so can secure a more comfortable retirement and make the most of the money that should rightfully be yours. It’s important to note that income rates vary in different parts of the UK, so the specific rules may differ depending on where you live.

TAX BENEFITS UPFRONT

The main reason why £1.3 billion is left unclaimed in tax relief is that the higher rate and additional rate taxpayers often need to claim the additional tax relief manually. The process can vary depending on the type of pension plan or the setup of your employer’s pension scheme.

If you’re in a ‘net pay’ arrangement, you’ll automatically receive tax relief because your pension payment is deducted from your salary before taxes are applied. This means you receive the tax benefits upfront.

///CONTINUE READING THIS BLOG ON PAGE 10/11 (CLICK HERE)///

[1] Standard Life – Millions unclaimed pension tax relief – published 10/07/2023

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless plan has a protected pension age).

The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time your take your benefits.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.