Government to make it harder to claim pensions tax relief

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The Government is planning to make it harder for higher and additional rate taxpayers to claim pensions tax relief.

It revealed in its latest newsletter that it will be lowering the threshold for requiring evidence to support new requests. This means you could be asked to provide evidence when you wouldn’t have in the past.

It is also stopping accepting requests by phone – you must now claim online or via letter.

It’s important to make sure you still go through the process of claiming tax relief, even if it seems like more of a faf. This relief can save you hundreds or even thousands of pounds a year in tax, which instead goes towards your retirement savings. It’s basically free money.

How to claim

To claim pension tax relief on higher amounts, start by finding your payslip, which should show your National Insurance number and any contributions you have made to your pension.

Then, check whether your pension scheme is ‘net pay’ or ‘relief at source’. If you are in a net pay arrangement, you don’t need to make a claim as the relief will have already been applied.

However, if you are in a relief at source arrangement, you need to claim the higher or additional rate relief yourself (the basic 20% pension tax relief rate is still automatic).

You can claim either by completing a tax return and claiming it there, or by claiming online from HMRC. You’ll need a Government Gateway account to claim online.