As a higher rate taxpayer in the UK, you are eligible to claim tax relief on personal pension contributions. This means that you can reduce the amount of income tax you pay by the amount of money you contribute to your personal pension. Here’s a step-by-step guide on how to claim tax relief on your personal pension contributions.

Step 1: Check your eligibility

To be eligible for tax relief on your personal pension contributions, you need to be paying income tax at the higher rate of 40%. You can claim tax relief on contributions up to the lesser of your annual earnings or the annual allowance for the tax year. The annual allowance for the tax year 2022-23 is £40,000. If you have already started drawing from your pension, there may be additional rules that apply.

Step 2: Make your personal pension contributions

The next step is to make your personal pension contributions. You can make regular contributions or one-off lump sum payments. You can contribute to a personal pension plan, a self-invested personal pension (SIPP), or a stakeholder pension scheme.

Step 3: Claim your tax relief

You can claim tax relief on your personal pension contributions in one of two ways:

Option 1: Through your pension provider

If you make contributions to a personal pension plan or a stakeholder pension scheme, your pension provider will claim basic rate tax relief (currently 20%) on your behalf and add it to your pension pot. To claim higher rate tax relief, you need to complete a self-assessment tax return. Your pension provider will provide you with a statement showing the total contributions you made during the tax year, including basic rate tax relief.

Option 2: Through your self-assessment tax return

If you contribute to a SIPP or your pension provider does not offer automatic tax relief, you can claim higher rate tax relief through your self-assessment tax return. You can claim tax relief on your pension contributions by entering the total amount you contributed (including any basic rate tax relief claimed by your pension provider) on your tax return. You will then receive tax relief at your highest marginal rate.

Step 4: Review your pension contributions regularly

It’s important to review your pension contributions regularly to make sure you are contributing enough to meet your retirement goals. As a higher rate taxpayer, you can benefit from tax relief on your pension contributions, which can help boost your retirement savings. Speak to a financial advisor if you’re unsure about how much you should be contributing to your pension.