Top up your pension pots

Top up your pension pots

Top up your pension pots

You can claim tax relief for your private pension contributions. The current annual allowance for tax relief on pensions is £40,000. Remember, that there is now just 3 months left in the current tax year in which to maximise the amount of tax relief you can claim by topping up your pension pot.

There is a three-year carry forward rule that allows you to carry forward previous years unclaimed allowances. There is also a lifetime limit for tax relief on private pension contributions. The limit is currently £1.055 million.

You can claim tax relief on private pension contributions worth up to 100% of your annual earnings, subject to the overriding limits. Higher rate tax relief is allowed.

This means that if you are:

  • A basic rate taxpayer you get 20% pension tax relief
  • A higher rate taxpayer you can claim 40% pension tax relief
  • An additional rate taxpayer you can claim 45% pension tax relief

The first 20% of tax relief is usually automatically applied by your employer with no further action required if you are a basic-rate taxpayer. If you are a higher rate or additional rate taxpayer, you can claim back any further reliefs on your Self-Assessment tax return.

The Income Tax rates are different in Scotland.

To know more on Top up the Pension Pot Book a Free Consultation

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