How do I claim higher rate pension tax relief?

If you pay tax at the higher rate of 40% or more, then you may not be getting your full pension tax relief.

As an incentive to people to put money into a pension pot, the government allows pension tax relief at the highest rate of tax you pay on your income.

Everyone automatically gets the basic rate, 20%, tax relief on their pension fund. As a higher rate taxpayer, you then have to make an official application to claim your full allowable amount of 40%.

How do I make a higher rate pension tax relief claim?

To get the extra 20% you are entitled to, you must claim either through your self assessment tax return or in writing to HMRC with supporting evidence.

Self assessment: those that are part of the self assessment system can submit this higher rate pension tax relief claim on their tax return. The deadline here is the same as the self assessment deadline for submitting your tax return.

If you have missed claiming the relief in a previous tax year an overpayment relief claim can be made to amend your tax return. This can only be done in writing and if successful will trigger any tax rebate you are owed through your self assessment account.

PAYE: If you are paid through the PAYE system, you are not obliged to fill in a tax return. Your application for higher rate pension tax relief must be done in writing to HMRC at Pay As You Earn and Self Assessment, HMRC, BX9 1AS.

There is a four year deadline on these claims, after that that extra 20% is lost.

I’m in the additional rate tax bracket, can I claim more than the automatic 20% pension tax relief?

Yes, if you are an additional rate taxpayer, you are entitled to pension tax relief at 45%. Unlike higher rate taxpayers, you must claim for the 25% difference through your self assessment tax return.

The additional rate of income tax is only applicable to those earning within the additional rate tax bracket.

How much is the higher rate pension tax relief worth?

If you are a higher rate taxpayer, you are entitled to 40% pension tax relief.

You will have received 20% of this automatically. You are applying for the remaining 20%, thereby doubling the amount you previously saved.

How do I claim if I am no longer a UK resident?

Lots of people that have moved abroad still have a UK pension and are eligible tax relief on their private and sometimes government pension income.

A UK non resident pension tax relief claim becomes more complicated because more elements must be factored in, such as: your residency status and if your new home country has a double taxation treaty with Great Britain.

Do occupational pension schemes provide higher rate pension tax relief?

Occupational pension schemes usually take your pension contribution out before working out tax, so you should already be getting higher rate pension tax relief. This applies to public sector and company occupational pension schemes.

It’s worth checking that your employer hasn’t taken off your pension payments after tax. This is unusual, but if they are doing that, you won’t be getting your full tax relief and will need to apply separately.

I pay into a retirement annuity, does higher rate pension tax relief apply?

Yes, this tax relief does apply to retirement annuities and providers don’t automatically claim it back in most cases. So you’ll miss out on your full amount if you don’t make your own claim. This does not apply to a retirement annuity that is paid into from a pension plan, only an individual’s money.