HIGHER RATE PENSION TAX RELIEF
Claim Higher Rate Pension Tax Relief and Secure Your Tax Refund with Towerstone Accountants
Earn over £50,270 and contributing to a pension? You could be owed money by the taxman and for just £150, Towerstone Accountants will secure your tax refund with no upfront costs, handling all the paperwork from start to finish.
What Is Higher-Rate and Additional-Rate Pension Tax Relief?
Higher-rate and additional-rate pension tax relief provides an extra level of financial relief for individuals earning over £50,270 on their personal pension contributions. It’s an enhancement to the basic 25% tax relief bonus everyone receives on pension contributions.
The amount of additional tax relief you can claim depends on your income level:
Higher-rate taxpayers: Claim an extra 20%, making total relief up to 40%. For example, a £10,000 pension contribution could cost as little as £6,000.
Additional-rate taxpayers: Claim an extra 25%, totaling up to 45%. A £10,000 contribution might cost as little as £5,500.
Unlike basic-rate tax relief, which is automatically applied to your pension contributions by your provider, higher and additional-rate tax relief must be claimed separately. As a result, an estimated £830 million in tax relief goes unclaimed every year.
How Can You Benefit?
The extra tax relief doesn’t have to stay in your pension. You can enjoy the benefits in three ways:
Reduce your annual tax bill
Adjust your tax code, lowering future tax payments
Claim a tax rebate
Example Scenario
Sophia earns £53,000 annually and contributes £5,000 to her pension:
She automatically receives 20% basic-rate relief, meaning £1,000 of her contribution comes from tax relief. Her cost is reduced to £4,000.
As a higher-rate taxpayer, Sophia qualifies for an additional 20% relief on the portion of her earnings above £50,270. That’s £2,730 of her £5,000 contribution.
Her additional tax relief is £546 (20% of £2,730). Combined with the £1,000 basic relief, her total relief is £1,546.
Sophia’s net cost for her £5,000 pension contribution is just £3,454.
If Sophia earned £55,270 or more, her entire contribution would qualify for the full 40% relief, reducing her cost to £3,000.
How to Claim Higher Rate Tax Relief on Pension Contributions
The process can be complex and overwhelming but Towerstone Accountants makes it simple. We’ll file a self-assessment tax return on your behalf to ensure you receive every penny you’re owed. There are absolutely no upfront costs and we handle everything for you.
Don’t leave your money unclaimed. Get in touch and let us handle your higher rate pension tax relief efficiently, affordably and stress-free.
Navigating Self Assessment
Our team of tax specialists have developed a set of guidance notes based on frequently asked questions regarding the accounting aspects of your business.
Whether you are looking for guidance on what expenses you can claim, personal allowances, filing deadlines, working pensions and HMRC payments plans; the sole objective of our guidance centre is to provide you with comprehensive guidance notes on HMRC rules and regulations that you can read and digest at your own pace.