If you are a high rate tax payer with a personal pension, you need to be sure that you are receiving your full income tax relief on your contributions.
When you make a personal pension contribution, basic rate tax relief is automatically applied. So a £400 net monthly pension contribution becomes a £500 gross monthly pension contribution. In this example, as a high rate tax payer you are due a further tax refund of £100 for each contribution. To receive this you need to inform HMRC, which would generally be done using a self assessment tax return.
The problem is that some people simply forget about this. Others are not in the habit of completing a tax return. Whilst this is common practice for the self employed, many employed people have not completed a tax return for years.
According to research conducted by the Prudential in 2013, an estimated amount of £229m remains unclaimed. Remember, in the above example, you could be missing out on £1200 per year.
If this affects you, claims can be backdated by up to 3 years and you need to ensure that you get those annual tax returns in. This is a reasonably straightforward process, so speak to HMRC or employ an Accountant to organise this for you.
