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
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