We keep telling you the saving on pensions is too good to ignore. Still skeptical? Here’s the deal: The government’s HMRC gives tax-relief on every pound put into your pension. This is a HUGE saving for you – 20% for basic-rate taxpayers, 40% for higher-rate payers and 45% for additional-rate payers. 

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If the money put into your pension has already been taxed through your salary, the government undoes this by paying that tax back to you. 

How does it work?

For every £100 you pay into your pension the government tops it up by £25 giving you a total of £125. Since £25 is 20% of £125, it's a total tax refund for the basic-rate tax payer. Earning more? Higher rate or additional-rate taxpayers have to reclaim the rest. 

The image below illustrates how much tax-back you'll receive as a top-up to your pension (pink) and the tax you have to reclaim (blue). The higher your income tax band, the more you get back. 

Get a free guide on pension tax relief from Hargreaves Lansdown

How do I reclaim?

On a workplace pension scheme you should receive the extra tax-relief automatically through payroll BUT CHECK because it's not gauranteed and you could be missing out on a lot of money. If you're not getting the extra relief through payroll, you have to do some paperwork. Tedious? Yes. Worth it. Yeeeees! Even so, a whooping quarter of a million people in the UK don’t reclaim their tax each year (yep, we we’re shocked too). We don’t want this to happen to you so, for higher-rate tax payers (earning from £46,351 to £150,000) we’ve made it simple to get back your pounds with our letter template. Post this to HMRC or call them. If you’re an additional-rate tax payer or self-employed, you need to include your pension contributions in a self-assessment tax return -  and, hey presto, you’ll be rewarded with a big fat cheque you can cash-in to your bank account. It’s a no brainer. 

Uh oh, I was one of the quarter million. Is it too late to reclaim? Contact HMRC today. 

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