How do I claim tax relief on transferring my savings account to a pension?
05 April 2022
Question by Nichola
I’m not sure I was clear in my question….
I am transferring from savings account to a pension….. how do I claim tax relief on this?
Thanks very much
Answered by Boring Money
Thanks for your question. A personal contribution into a pension will benefit from 20% tax relief automatically. For instance, if you contribute £1,000 into a pension (the net amount), an additional £250 will be credited to your pension by the provider, which they then reclaim from HMRC. This results in a total contribution of £1,250 (the gross amount). In many cases this tax relief is credited almost immediately but for some other providers this can take a few weeks. It simply depends on the processes of the pension provider in question.
If you are a higher or additional rate taxpayer, you can claim another chunk of tax relief (20% if a higher rate taxpayer or 25% if an additional rate taxpayer) in addition to the 20% automatic relief. HMRC won’t contact you to tell that you are owed further tax relief nor will they refund you automatically. Any claim must be made by you, and this is usually cleared up via self-assessment tax returns.
The good news is that if you are entitled to some extra tax relief and you don’t complete self-assessment tax returns, it’s just a case of contacting HMRC, usually in writing, and informing them of the total net personal contributions made in each tax year. You can also go back four tax years and reclaim any further tax relief you were owed due to personal pension contributions in these years.
Just a couple of other points to be aware of, it’s important to ensure you have sufficient relevant earnings and annual allowance available in the tax year that you wish to make your desired contribution.
I hope this helps!