HM Revenue & Customs automatically gives tax relief on pension contributions at the basic rate of 20 per cent, but if you pay income tax at 40 per cent or 50 per cent, it is up to you to claim this difference. A 40 per cent taxpayer who has contributed £8,000 net in pension contributions each year for the past three years, but not claimed their higher rate relief, could now be due a refund of £6,000.
Claims can be made in respect of the last four tax years, but, importantly, 5 April 2013 is the cut-off date for anyone wanting to make a claim regarding contributions made in the 2008-09 tax year.
This extra relief will apply to contributions into personal pensions and group personal pensions (which is one of the most common arrangements for people in permanent employment). However, employer contributions do not attract this extra relief.
To make the claim, you can simply phone or write to HMRC (contact details below) noting relevant details, including how much you've paid into your scheme, your National Insurance number, the name and address of your employer and the dates for which you are claiming. You should also give details of your pension scheme. Alternatively, you can complete a self-assessment tax return.
The top rate of tax falls from 50 per cent to 45 per cent in the 2013-14 tax year, which means it makes sense for top-rate taxpayers to pay into their pensions before the drop.
High earners can benefit from the three-year carry forward rule. This allows individuals who have used up all of their current tax year's allowance to use any unused pension allowance from 2009-10, 2010-11 or 2011-12. If no pension contributions have been made in any of those years, you could contribute an extra £150,000 into your pension before 5 April.
HM Revenue & Customs
Pay As You Earn
PO Box 1970
Liverpool
L75 1WX
Tel: 0845 300 0627
