28 Days Richer – Day 3: Claim Your Missing Pension Tax Relief

One thing each day that puts money in your pocket and takes 5 minutes or less.

£1.3 billion in pension tax relief went unclaimed between 2016 and 2021, and 8 in 10 higher-rate taxpayers fail to claim their extra relief.

If you pay the higher or additional tax rate, you’re almost certainly leaving money on the table.

How Pension Tax Relief Works

When you put money into a pension, the government tops it up with tax relief.

Basic rate taxpayers get 20% added automatically, so if you put in £80 it becomes £100 in your pension.

But if you pay 40% tax, you’re entitled to 40% relief total, and that extra 20% doesn’t come automatically – you have to claim it yourself.

The same applies if you’re an additional rate taxpayer at 45%.

The Real Numbers

Say you put £10,000 into your pension.

As a higher-rate taxpayer, your total relief should be £4,000, but only £2,000 gets added automatically.

The other £2,000 you need to claim yourself, which means that £10,000 contribution could effectively cost you just £6,000 if you claim properly.

Today’s 5-Minute Action

Check your payslips to see how much you’ve contributed to your pension this tax year, then either claim through Self-Assessment (if you file one) or contact HMRC directly.

You can backdate claims for four years, so even if you’ve missed out before, you can still recover some of that money.

Who Needs to Claim

Anyone paying 40% or 45% tax who contributes to a pension through their employer’s net pay arrangement might already get full relief, but if you use salary sacrifice or contribute to a personal pension, it’s worth checking as the rules vary.