Do the following criteria apply to you? If so you might like to read this article…
- Do you make payments into your own or your employer’s pension scheme?
- Do you pay higher rate tax, 40% or 50%?
- Have you omitted to claim higher rate tax relief on the contributions you have made?
If your answer to these questions is Yes, or Yes and No, then you may be one of the estimated 425,000 UK tax payers that are failing to claim higher rate relief on workplace pension contributions.
You may for instance assume that your payroll department are dealing with this for you. Or, that the Government automatically channels any refunds due into your pension pot. This is often not so.
If you pay ‘net’ contributions the tax office will top-up your fund for the standard rate tax paid of 20%. The remaining 20% tax relief, (if you pay tax at 40%) or 30%, (if you pay tax at 50%) has to be claimed from HMRC direct.
Which pension schemes are affected?
Most money purchase pension arrangements are affected, including:
- Personal pension plans (including Self Invested Personal Pensions – SIPPS)
- Workplace ‘contract based schemes’ including group personal pensions, group stakeholder schemes and group SIPPS.
The following schemes are not affected:
- All final salary schemes.
- Money purchase schemes that operate through a salary sacrifice arrangement in which case pension contributions are made before tax is deducted.
- Schemes where contributions are deducted from taxable pay.
If you are not sure what sort of pension you have check with your pension provider or employer.
How do I make a claim?
You need to make a claim in writing to HMRC as soon as possible. Claims can be backdated for up to four years. We would, of course, be delighted to do this for you. You will need to provide details of the gross and net contributions you have made in the period of your claim