Stand-out Q – claiming tax relief on pensions…
Our Technical Support Unit provides a pension tax and trust technical helpdesk to advisers. Each week, we post tweets covering the stand out questions and our answers in case others might also find them helpful. As Twitter’s character restrictions only allow for the bare bones of the Q&A we link to the details here, too.
My client hasn’t claimed tax relief for pension contributions on their tax return. What can they do?
20% tax relief is claimed by pension providers automatically upon receipt of net personal contributions. For basic rate taxpayers, no further tax relief will be due on the pension contributions. However, an individual who is a higher rate or additional rate taxpayer is entitled to further tax relief, which may have been given by another method already.
Sometimes, pension contributions are made via payroll to an occupational scheme. This results in income tax relief being given automatically, as the pension contribution is deducted from the individual’s gross pay. The income tax liability for the earned income is calculated on the remaining salary after the pension contributions have been paid to the occupational scheme.
It is also worth checking whether any tax relief has been given via the client’s tax code. Tax relief may have been given in full already.
Finally, if tax relief has not been given and the individual is not required to submit tax returns, it may be possible to write to HMRC to claim the refund without needing to file a return.
Once it has been established that the tax relief needs to be claimed on the individual’s tax return, any higher rate and additional rate relief should be claimed via the individual’s tax return. If this has not been done, for example in respect of earlier years’ tax returns, it may still be possible to claim the relief.
There is a twelve month window to amend tax returns. This means that the tax return for 2017/18, which is due to be filed on 31 January 2019 at the latest, can be amended until 31 January 2020.
For tax returns which can no longer be amended as the 12 month window has elapsed, the client can submit an overpayment relief claim. The deadline for making the claim is four years from the end of the tax year. This means that, until 5 April 2018, it will be possible to claim the tax relief for 2013/14, 2014/15, 2015/16 and 2016/2017.
An overpayment relief claim is submitted by writing to HMRC. Further guidance, including the information which must be included to make a valid claim, is found on HMRC’s website.
A small amount of interest may be due on any tax refund.
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