Are you getting the full tax relief on your workplace pension contributions?
If you are in receipt of over £50,270 of taxable income for the current tax year, there may be the opportunity to claim tax relief on the gross value of your personal pension contributions. This gross total would need to be entered on your Tax Return.
A common misconception is that this relief is only available on private pensions. This is not the case, employee contributions made through a scheme where tax relief is not awarded at source (i.e. a non-salary sacrifice scheme) can obtain tax relief this way.
The relief works by extending your basic rate tax band by the gross value of the contributions made. For example, if the gross value of your pension contributions amounted to £3,000, a tax saving of up to £600 could arise. This is because this £3,000 is taxed at 20% instead of 40%.
The gross value of pension contributions made will also reduce your assessable income when determining if any child benefit needs to be repaid or if your tax free personal allowance needs to be reduced. This can lead to further tax savings.
If you are unsure whether tax relief needs to be claimed on your workplace pension, then please get in touch.
For more information on this, please contact Joe Wilson on 023 8046 1237.