Hi. I’m here to answer this question – do I need to claim tax back on payments into my pension plan?
Pension plans come with tax benefits.
This means that when you pay in, money you otherwise would’ve paid in tax gets added to your plan instead, sometimes known as tax relief.
If you pay the basic rate of tax, you’ll get tax relief at a rate of 20%.
For higher rate taxpayers it’s 40%, and for additional rate taxpayers it’s 45%.
Tax rates and bands are different depending on where you live in the UK. You can check which band you’re in on the government’s website.
Now, here’s the thing – depending on how payments are made into your plan, you may only get 20% tax relief added automatically.
So if you pay tax above this rate, you’ll need to claim the extra tax relief.
But how do you know if you have extra to claim?
Some people’s pension payments go into their plan before tax. This usually happens through your employer, and it’s sometimes called salary sacrifice, salary exchange, or salary deduction. If your payments are made this way, you won’t need to claim anything back. So check with your employer.
But with 'relief at source' arrangements, payments are made into your plan after you’ve been taxed – and in this case, only 20% tax relief will be automatically added to your plan.
This means that if you’re a higher or additional rate taxpayer, you’ll need to claim back tax relief.
If you normally file a self-assessment tax return, you should claim back on this form.
Otherwise, you can get in touch with HMRC.
You can find out more on the government’s website.
