Higher-rate taxpayers contributing to pensions should ensure they reclaim the full pension tax relief they're due, advises Simon Bonnett from Duncan Lawrie Private Bank. Around 250,000 people in the highest-earning tax bracket wrongly assume that personal contributions paid to company pensions automatically receive up to 50% tax relief, when it is only the basic rate of 20%.
"Higher-rate taxpayers are responsible for filling in their own self-assessment tax forms and claiming pension tax relief," says Bonnett. "Many fail to do so, [believing] their employers will have claimed it on their behalf."
Only people in conventional occupational money-purchase schemes enjoy full tax relief at source. This could be costly: on a £10,000 contribution you could lose out on £2,000-£3,000. If this affects you, you need to act fast as the deadline for claiming tax relief for the past financial year is 31 January 2012.
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