Pension contributions: what you need to declare on your tax return

If you’re completing your 2018-2019 self-assessment tax return over the next few days, don’t forget to declare your pension contributions. Taxpayers routinely omit vital pensions data from their tax returns, forfeiting valuable tax relief or underpaying tax.

Higher-rate taxpayers are most at risk of missing out. If you make regular contributions to a private pension, such as a stakeholder or personal plan, your provider will automatically claim basic-rate income-tax relief on your behalf, reducing the cost of contributing by 20%. But higher-rate and additional-rate taxpayers are entitled to a further 20% and 25% respectively; this relief can only be claimed by declaring your contributions on your annual tax return, so if you don’t provide this information – or you don’t make a return – you won’t get it. Around 250,000 taxpayers make this mistake.

The other side of the coin is that anyone exceeding their annual pension contribution allowance must declare this on their tax return. The allowance is usually £40,000 or your annual income, if this is lower, though some higher earners get a smaller allowance, which may be as little as £10,000.

If you’ve gone over your allowance – and it’s your responsibility to check – you must tell HMRC. You’ll then pay a tax charge. Failing to declare this information means you’ll be paying too little tax, so interest and penalty charges could become payable when the error comes to light.