Tax relief on pension contributions - Relief at Source

My boss has enrolled me into a pension scheme. When I looked through the paperwork, it said I could get tax relief on the pension contributions I make via relief at source. What does this mean? 

1st August 2017

When paying into a pension scheme, its members may receive tax relief on contributions they make. This means that money that would have gone to the Government as tax goes into your pension instead.

There are essentially two ways you could receive your tax relief; through relief at source or via a net pay arrangement. Relief at source like yours means if you’re a basic rate taxpayer, you don’t need to do anything to get the tax relief paid into your pension. It will happen automatically.

If you’re a higher or additional rate taxpayer, to get full tax relief you need to claim back some of your tax from the Government. This is because tax relief is only added to your pension at the basic rate of 20%. To get all the tax relief that is due to you, you need to claim back the difference on your annual tax return, or alternatively, if you are a higher rate taxpayer you can contact HM Revenue & Customs.

Information on how tax relief works can be found here.

 

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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