After discovering that a third of pension relief claims made by PAYE tax codes weren’t correct, HMRC is now tightening checks on claims submitted for pension tax relief.
If you submit claims for pension relief, keep reading to learn how this could affect you.
What’s the problem with pension relief claims?
Personal pension contributions are made after paying basic-rate tax, so only taxpayers in the higher rate or additional rate bands need to claim relief on private pension contributions.
However, HMRC found that basic-rate taxpayers often tried to claim pension relief, too, or even made claims after relief had already been granted through salary deductions.
To make matters worse, instead of using information from their pension provider, some claimants simply guessed how much they paid into their personal pension that year.
How are pension relief claims changing?
Going forward, it will no longer be possible to claim pension relief over the phone. From 1st September 2025, most pension relief claims must be made online instead.
Postal claims will only be possible for those with a valid reason for not claiming online.
Additionally, while HMRC previously only required taxpayers to provide proof of pension payments if they exceeded £10,000, the agency now requires supporting evidence for all relief claims.
This means you’ll need a letter or statement from your pension provider each tax year showing how much you contributed to your personal pension if you want to make a relief claim.
These changes won’t impact individuals who submit self-assessment tax returns, as their pension relief claims will continue through their tax return as normal.
So, who can claim pension relief?
Higher rate taxpayers and additional rate taxpayers who pay into a personal pension or workplace pension are entitled to claim an additional amount of tax relief.
For example, an additional rate taxpayer would receive a further 25% in pension relief.
In Scotland, taxpayers in the intermediate rate band or higher can apply for tax relief on private pensions.
If tax relief is not automatically given on their pension contributions, taxpayers can also make a claim.
Guidance on how to claim tax relief on private pension payments is available on the government website, or you can contact a financial adviser for personalised pension advice.
With retirement costs and the State Pension Age rising, it’s important to make sure you’re contributing enough to your personal pension to support you through retirement.
This includes optimising tax reliefs, which our Barnsley accountants can help you with.
Here at gbac, our experienced team will be happy to assist you with tax-efficient pension planning. Just call us on 01226 298 298 to get started, or email info@gbac.co.uk for more information about our services.