Client questions
There are many financial issues facing us all in the UK today; an ageing population, pressure to consume, insufficient saving, incomprehensible financial products and services, whilst to top it all there are very few places to turn for truly impartial advice.
This section of our website aims to answer some of the questions we are commonly asked by clients. We hope you find what you need, but if not why not have a look elsewhere on our site or e-mail us your question using our enquiry form.
Q - What tax relief should I claim on pension contributions?
What you need to be aware of is that there are two main types of pension scheme, namely “occupational” and “personal” pensions. Confusingly, many employer sponsored pensions are now “personal” pensions. Nothing is ever straightforward with pensions!
With occupational pensions, employees generally receive their full tax relief via the PAYE system and therefore higher rate taxpayers shouldn’t have any further relief to claim. With “personal” pensions such as SIPPs, Stakeholder Schemes or Personal Pension Schemes, irrespective of whether you make these via an employer or not, you will receive basic rate tax relief (currently 20%) “at source” and then be responsible for claiming the remaining 20% via your self-assessment tax return if you are a higher rate taxpayer.
If your other tax reporting is straightforward, HMRC might simply change your tax code (increase your Personal Allowance) to save you having to reclaim the relief each year. This does not mean that you should not complete a tax return though.
If you are in any doubt at all, please get in touch. The best course of action is to do a rough and ready income tax calculation once you have received your P60 early next tax year and this should clarify whether there is any further tax relief to reclaim or not.
Evolve - December 2009
