Higher Rate Pension Tax Relief Guide

Everyone who pays into their own pension is entitled to tax relief but you might not be getting it all if you pay tax at the higher rate.

To encourage people to save for retirement, the government gives tax relief on pension contributions to a private pension scheme at the highest rate of tax you pay.

How much pension tax relief am I entitled to?

You will automatically get tax relief at 20% on your pension but if you pay higher rate income tax, it’s up to you to claim the rest.

The additional amount of tax relief you can claim is normally 20% of your contributions, taking the total up to the 40% tax rate that you pay out. Essentially, you end up with double the amount back in your bank account.

You can use our free pension tax relief calculator to work out what you could recoup.

Who can apply for higher rate pension tax relief?

Anyone who pays tax at the higher rate of 40% or more can apply for higher rate pension tax relief. If you complete a Self Assessment tax return, and haven’t included your pension payments in the return you can still claim. The extra tax relief would normally be included in your tax calculation, but only if the tax return is completed correctly.

What about occupational pension schemes?

If you’re a member of a company or public sector pension scheme, your employer should take your pension payments from your salary before tax is calculated. This means you automatically get pension tax relief at the highest rate of tax you pay.

Occasionally, an employer might deduct pension contributions after tax has already been taken off your pay. If this happens, you won’t automatically receive the full tax relief you’re entitled to. It doesn’t happen often, but it’s worth checking.

Does higher rate pension tax relief apply to Retirement Annuities?

Yes, if you pay into a retirement annuity with your own money – not the proceeds of a pension plan − you could also be missing out on tax relief, unless you make a claim to HMRC. Most retirement annuity providers don’t claim back tax relief automatically.

I am now living abroad, can I claim pension tax relief as a non resident?

If you are not living in the UK and are paying tax on a UK pension you could qualify for a rebate on some, or all, of the tax you have paid. Your eligibility depends on which country you are living in and your UK non residency status. More details about non-resident pension tax relief can be found in our free non resident pension guide.

How do I claim the additional tax relief?

To receive a higher rate pension tax rebate you have to claim it yourself. It won’t be refunded automatically. Under PAYE there is a timescale of four tax years to claim or you will miss out. If you complete a self assessment tax return and haven’t claimed it on your return you can amend it within the strict self assessment guidelines.

  • If you don’t fill in a Self Assessment form, you’ll have to make a direct claim with HMRC. This has to be done in writing with supporting evidence.
  • If you do fill in a Self Assessment tax return you will need to enter your pension contribution figures correctly on your return.
  • We can also highlight any other tax reliefs that you may be entitled to at the same time.

Higher Rate Pension Tax Relief Calculator

Calculate your pension tax rebate today

Enter your total private pension contributions for the last four years to get an estimate of your pension tax rebate.

Tax Rebate Calculator
How much could I claim? »

Contact HMRC to make your pension tax relief claim today.

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