THOUSANDS of workers could be missing out on a share of £811million free pension cash – you must claim now.
Pension tax relief is money that you’ll end up getting back from your pension instead of it going to the government.
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While more are paying higher rates of tax due to inflation and soaring costs, it could mean they’re eligible for a pension boost.
Pension contributions are automatically given an uplift based on the saver’s income tax rate.
However, for personal pensions only the basic rate of 20 per cent is automatically added.
Therefore, those who pay the higher-rate are responsible for claiming the remaining amount from HM Revenue and Customs (HMRC) through a tax return.
But nearly 3.5million people have still not filed their 2021-22 tax return and £811million in higher-rate tax relief is going unclaimed, according to Quilter – and the deadline for that is today (January 31).
For example, a higher-rate taxpayer who contributed £2,000 to their pension in 2021-22 could get £500 back.
However, if you fail to submit your return before the end of today then don’t worry, taxpayers have four years to claim pension tax relief from HMRC.
This means you could get money back from payments made as early as 2018-19.
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Jon Greer, head of retirement at Quilter, said: “These figures illustrate quite how much money is being missed out on by higher-rate and additional-rate taxpayers.
“Although there is very little time left to le a self-assessment form, doing so could put significant sums back in your pocket and ensure that you make full use of the benefits of the tax rules.”
How do I make a tax relief claim?
You can claim pension tax relief via a self assessment tax return.
You can do this online, via the HMRC website, or by sending a paper form.
Just head to the gov.uk website and type in “self-assessment tax returns”.
Once a claim for tax relief has been processed, HMRC will usually adjust the saver’s tax code in order to pay them; otherwise it may send a cheque.
Tips to fill in your self-assessment tax return
Here are our tips for getting through your online self-assessment and avoiding getting hit with a £100 fine.
Be prepared
Before you can complete and submit your tax return, you’ll need to have a so-called unique taxpayer reference (UTR) and activation code from HMRC.
This can take a while to receive, so if it’s the first time you’re completing self-assessment, make sure you register online immediately and ask HMRC for advice.
To sign in or register visit the self Assessment tax return section of HMRC’s website.
If you’ve already signed up for self-assessment, you can find your UTR on relevant letters and emails from HMRC.
HMRC accepts your payment on the date you make it, not the date it reaches its account – including on weekends.
Gather all the information and documents you need
Gather all of the expenses and documents relating to your income.
Having these to hand will help you race through the process.
This includes your 10-digit Unique Taxpayer Reference (UTR) and your National Insurance number.
The form also includes include bank statements and details of untaxed income from the year, which might involve finding your P60 (if you earned more than £8,500), your P11D (which has information about expenses and benefits), and payslips.
If you’re self-employed, you’ll need records of your income and receipts for expenses.
You will also need interest statements from banks and building societies, and details of pension contributions made.
If you need third parties to provide you with statements and documents, you should contact them right away as this can take time.
Fill in the form
Once you log in to complete your online tax return, you should begin by checking your personal details.
You should then choose to fill in the sections that fit your circumstances.
With an online tax return, HMRC’s system will react to the answers you give as you put them in.
This might mean, for example, that sections that are not relevant to you are removed.
When filling in the figures, the online system gives reminders about where you can find the information to fill in particular sections.
As a self-assessment taxpayer, you need to report everything you’ve earned over the tax year from April 6, 2021, to April 5, 2022.
This includes income from employment, self-employment, income from property, and interest and gains on your savings and investments.
Remember to also claim all the deductions you are entitled to, including gift aid on your charitable contributions and membership costs for zoos and museums.
If you are a member of a professional body that is required for your employment, you can include the cost of the subscription as a deduction.
Those who are self-employed can also claim back the running costs of a car, but not the cost of buying one.
Your tax will be calculated automatically as your fill in the return.
Take your time and double-check your return
Once you’ve filled in the empty fields, check all your numbers thoroughly before pressing submit.
When filing online, you can save your tax return at any time, so if you need to go away and double-check your figures, do so.
When you are happy that everything is correct, you can press send.
If you need to change your tax return after you’ve filed it, you can do so within 12 months of the original deadline or you can write to HMRC for any changes after that.
Don’t be afraid to ask for help
If you need help with your return, visit the GOV.UK website or call the helpline on 0300 200 3310.
There are HMRC guidance notes and manuals online, but if you’re struggling you could seek advice from an accountant or tax adviser.
Consumer group Which? also offers an online self-assessment tool that does the calculations for a tax return and submits it directly to HMRC.
You have to fork out £10 for the service though, or £36 if you’re not a member.
For more tips and help see our handy guide on how to fill out the tax return.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
