If you want to be as comfortable as possible during your twilight years, it is best to understand how to make the most out of your pension contributions.
Many people are overlooking pension reliefs and could be unintentionally limiting their future financial security.
What are pension tax reliefs?
Pension contributions are one of the most tax-efficient ways to save money.
Taxpayers who pay the basic rate of tax have a 20 per cent tax relief applied to pension contributions automatically and do not need to worry about missing out.
However, taxpayers who pay the higher-rate or additional-rate may find that a portion of their pension tax relief needs to be manually applied.
Regardless of whether you are entitled to more pension tax relief, the 20 per cent rate will be applied automatically in full.
Without claiming the relief you are entitled to, high-rate taxpayers could be leaving 20 per cent of additional relief on the table and additional-rate taxpayers may leave up to 25 per cent unclaimed.
How do I claim my full pension tax relief?
If you file a self-assessment tax return, it is possible to claim your pension relief through that.
For those in employment whose taxes are handled for them, you will need to make a dedicated declaration to HMRC via the online service.
The newfound knowledge of this relief may be frustrating for those who have worked and saved without knowing that they were missing out.
All hope is not entirely lost, as it is possible to backdate claims for up to four previous tax years.
It is also worth noting that many workplace pensions do apply relief, but it is often still possible to claim extra relief for yourself.
We encourage everyone to check their current pension plan to ensure that they are receiving the full relief that is owed.
Our team can help you if you are unsure whether this is the case.
Don’t leave pension relief unclaimed. Speak to our team today.