You can claim tax relief on your pension for the previous 4 tax years, not including the current tax year. So in the current tax year - 2023/24 - you can claim back to 2019/20.
If you’ve had different jobs over the last 4 years and not sure if you can claim anything back from previous jobs, HMRC will have records of your previous earnings and contributions so should be able to let you know if there is anything you can claim.
Tax relief refunds for previous tax years will most likely be paid to you as a lump sum cheque that you can pay into your bank account.
It’s important to contact HMRC by April 5th of the current tax year to ensure you don’t lose a whole tax year of claims. Once the 4 years is up, you can’t make a claim. For example, tax relief claims for 2019/20 will be lost on April 6th, 2024.
How does tax relief on pension contributions work?
When you save into a pension, you essentially get refunded, or ‘relieved of’ the tax you would have otherwise paid on that money. The tax bit is also put into your pension as a little boost to the pot.
So, if you put £100 into a pension and you pay basic rate tax of 20%, then it would only be worth £80 in your pocket.
Paying into a workplace pension comes in several formats. So the way the tax relief is applied is not the same across the board.
Employed workers tax relief
If you’re part of a Salary Sacrifice scheme or Net Pay scheme, your tax relief is taken care of automatically through payroll. So there is no extra pension tax relief to claim.
If you’re part of a Relief at Source scheme, then there may be some tax relief to claim back.
In a Relief at Source scheme, basic rate tax of 20% is automatically provided. So if you earn under £50,270 a year, then there is nothing extra for you to claim.
If you earn above £50,270 and are therefore a higher rate (40%) tax payer or additional rate (45%) tax payer, you will need to claim back the bit between 20% and 40%-45%.
If you’re not sure which of these three schemes you’re part of, contact your payroll/pension department at work.
Self-employed workers tax relief
If you work for yourself and have a personal pension, known as a SIPP, then you may be owed tax relief.
SIPPs use the Relief at Source method of giving tax relief. Again, if you’re a higher rate or additional rate tax payer, you will need to claim back some pension tax relief.
How to claim back higher rate tax relief on your pension
You can claim back higher rate tax relief by phone, in writing or via a self-assessment tax return form.
The easiest way for employed (PAYE) workers - who don’t usually fill in a tax return – is to call HMRC's pension department on 0300 123 1079.
You will need to have your national insurance number ready.
Simply tell them you believe you have some tax relief to claim back on your pension as you’re a higher rate tax payer. They should be able to do the rest over the phone.
A useful tip is to contact HMRC between just after your 11th pay day of the tax year. So this will be at the beginning of March. HMRC will be able to adjust your tax code for the current tax year, so your final paycheque of the tax year will include a refund of your higher rate tax relief. At the same time, any tax relief owed for the previous 4 tax years can be claimed.
Self-employed workers
If you work for yourself, you will already be familiar with filling in your self-assessment tax return.
So this will be the simplest option for claiming back your tax relief. As you typically complete your self-assessment tax return by 31st January of the following tax year, then you don't need to worry about claiming back for the current tax year.
When filling in your pension contributions on your tax return, it's vital that you include the gross personal contribution including basic rate tax relief. The easiest way to find this figure is to look at your pension contributions statement for the whole tax year. You should see one column for personal contributions and one column for tax relief added. Add both of those up (if not already done so on your pension statement) to give you the gross total. The higher rate tax relief you're owed is calculated from this figure.
If you think you have tax relief from previous years prior to the most recent complete tax year, then phone HMRC.
How will I get my higher rate tax relief paid?
For the current tax year, any higher rate tax relief owed back to you will most likely be paid by way of tax code adjustment.
This means your next paycheque will include the tax relief you can claim back. It will not be paid into your pension so will need to decide what you do with the money as it will go straight into your bank account.
For previous tax years, you'll probably get your refund as a cheque in the post.
If you're completing a self-assessment tax return, you may get a rebate (refund), a reduction in tax liability going forwards, or an adjustment to your tax code. It will depend when you complete you tax return.
Summary
If you’re in a Relief at Source pension scheme and you earn over £50,270, or have done in the previous 3 tax years, contact HMRC to claim back tax relief.
It could be worth more than you think!
