Home > Ask Our Experts > Higher Tax Bracket: Can I Claim Tax Relief on Pension

Higher Tax Bracket: Can I Claim Tax Relief on Pension

By: J.A.J Aaronson - Updated: 24 Apr 2014 | comments*Discuss
 
Tax Pension Contributions Tax Allowance

Q.

At present I'm paying 6% towards a pension scheme and my company is paying 6%. Am I OK to claim tax relief on my contributions since I'm in the higher tax bracket ?

(S.S., 14 April 2009)

A.

Every year, billions of pounds worth of tax allowances goes unclaimed. Generally this is because people are frequently unaware of their entitlement; furthermore, an already over-stretched HM Revenue and Customs (HMRC) is either incapable of or unwilling to give rebates and allowances of their own volition. Pension tax allowances are amongst the most important, and can minimise your tax burden by a significant amount every year; indeed, the available tax allowances are perhaps the primary reason that people contribute to pension funds rather than investing their money elsewhere.

Good News

The good news is that you are indeed entitled to tax allowance on your pension contributions (see our article Pension Tax Relief in this section.) The fact that you are a higher rate taxpayer has no effect on this. However, the way in which you claim this allowance will depend on your specific circumstances.

You do not mention what type of pension plan you are paying into. This is important as it will determine how you get the allowance to which you are entitled. Many employers run company pension schemes. If you are paying into this type of scheme, your employer will be making contributions from your pre-tax income. You are therefore getting the allowance by default and there is no need to take any further action.

Personal Pensions

However, companies are increasingly choosing to make contributions to their employees’ Personal Pension Funds, rather than set up their own. If you and your employer are paying into a personal pension, you will be making contributions from your post-tax income. The pension operator will then recoup the tax from HMRC and put it back into your pension pot. This is only the case for basic rate tax, though; for every £8 of post-tax income you pay into the pension, you will actually end up with £10.

As a higher rate taxpayer, you will have to recoup the remaining tax yourself. You can do this quite easily by making a claim direct to HMRC. This can be done by phone or in writing. Alternatively, you can apply for the allowance through your self assessment form if you are already a self assessment taxpayer.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
I took early retirement from Education in March 2009 and was in the higher tax bracket earning over £42,000 over the last few years. I paid into the Teachers Pension scheme and have been receiving my pension since Sept 2009. Can I assume that any tax relief was claimed by the Pension Scheme? Or do I have to make a back dated claim myself??
et - 26-Jan-12 @ 2:12 PM
I have 2 part time jobs one 20 hours a week and the other is 30 a week, The second which is 30 a week is temporary I am paying more tax on the first job and the second is nornal which is not my main job, what can I do?
az - 2-Sep-11 @ 11:45 AM
I pay tax at 40% and I'm having trouble understanding extra amount to claim back. I pay 1920.00 pa to my pension pot and get credited 2400.00 so 480.00 is 20% tax relief and 1920 is 80% - that is (1920/80)*(100)*20% = 480.00 tax relief rec'd = 20% of 1920. When I claim the additional 20% allowable I'm told to claim another 480.00, but as a 40% taxpayer the 1920.00 I've paid is 60% of my allowable gross contribution. So I calculate (1920/60)*(100)*(40%) = 1280.00 - 480.00 rec'd = 800.00 Am I missing something?
DanM - 8-Jul-11 @ 12:46 PM
Share Your Story, Join the Discussion or Seek Advice...
Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • JellyBean
    Re: Are DVLA Car Tax Rates Fair?
    A one-litre Ford Fiesta petrol Ecoboost at the average 12,000 miles per annum, puts out exactly the same CO2 in 12 months as, for…
    18 October 2019
  • Cherral
    Re: How Will My Second Job Be Taxed?
    I am a director of my husband's company getting paid £1500 per month. I would like to have a casual 25hr job at 8.60 per…
    16 October 2019
  • Lazarus
    Re: How Will My Second Job Be Taxed?
    I have two part time jobs 1st job 18hrs a week at £8.21 2nd job 12hrs a week at £8.65 an hour, both paid monthly... Anybody…
    1 October 2019
  • leigh
    Re: How Will My Second Job Be Taxed?
    I have been looking for a cleaning job two hours on a morning and two on an evening. I'm on working tax credits. I have been…
    26 September 2019
  • Bev
    Re: What is My Tax Code?
    My tax code is 506L which I think is incorrect. how do I check this?
    26 September 2019
  • davel
    Re: Paying for Training Can I Claim Tax Allowance?
    I have just paid for my son to carry out his pilot training £38,000 plus I have kept him for the last 2…
    24 September 2019
  • mac
    Re: How Will My Second Job Be Taxed?
    Hello, I have 2 jobs - 1 full time (my main job) through an employer that pays me £80k a year, then I have another, which…
    9 September 2019
  • Chris
    Re: How Will My Second Job Be Taxed?
    I'm an apprentice earning £8,482 a year. I also have a second job, 5 hours a week, earning £2,000 a year. As both wages total…
    8 September 2019
  • Laura
    Re: How Will My Second Job Be Taxed?
    Good afternoon, I have two full time jobs one 25,272 per year and second 24,591£ how much tax I pay in one year? . Thank you .
    7 September 2019
  • Jan
    Re: Payment of Pensions
    I would like the frequency of my State Pension payments changed to weekly from four weekly. How do I do this?
    30 August 2019