The Self Assessment deadline has passed
...but it’s not too late to
claim higher rate tax relief
on pension contributions.As your pension administrator, we reclaim basic rate tax relief of 20% on your pension contributions from HM Revenue and Customs (HMRC) on your behalf, but if you are a 40% or 50% rate taxpayer you can reclaim further tax relief via your self-assessment. Despite the deadline for self-assessment returns passing on 31 January, you can still reclaim up to four years worth of higher rate tax relief. This is great news if you’re a higher rate taxpayer as recent estimates suggest that millions of pounds are lost every year in unclaimed tax relief.
It has been difficult for higher earners to know how much they can contribute to a pension and receive higher rate tax relief in recent years due to the Government’s anti-forestalling regulations which were in place from April 2009 until April 2011. Before this, the amount of tax relief you could receive was fairly simple to calculate, as long as an individual didn’t contribute more than 100% of their earnings and did not go over the annual allowance for the tax year in which the contribution was made.
The changes made in April 2009 may have been confusing if you were a 40% or 50% rate taxpayer as it was not clear if you could claim back higher rate tax relief on contributions made between April 2009 and April 2011. However, if you have not claimed additional tax relief on your contributions, you can still do so by writing to your local tax office or claiming it via your self assessment. You can still claim unclaimed higher rate tax relief going back four tax years.
If you are a 50% rate taxpayer you could be missing out on up to £15,000 in unclaimed tax relief if you maximise the annual allowance of £50,000. If you are a 40% rate taxpayer, you could be losing out on £10,000. Remember, as your pension scheme administrator we will claim basic rate tax relief but it is your responsibility to claim any additional tax relief.
With numerous changes to the rules that govern how much you can contribute to your pension in recent years it is possible that you have thought that you could no longer claim higher rate tax relief. The good news is that you can claim back up to four years worth of tax relief on any pension contributions you have made. And remember you are only claiming what you’re entitled to.
