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Daily Express - Personal tax relief explainer

ended 15. May 2023

Daily Express looking for an expert to provide commentary on:
-What is pension tax relief?
-How does it work?
- When do you have to claim it?
- What is the pension annual allowance and how does it differ from the lifetime allowance?
- Thoughts on the Government's announcement to abolish the lifetime allowance?
- Higher rate tax relief on pension contributions - when can people claim?

 


 

1 responses from the Newspage community

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Editor
Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Tax relief boosts savers’ pension pots; for some, there can be up to 60% up for grabs. It's effectively the government rebating the income tax paid on earnt income. Someone earning £25,000 a year, contributing £1000, would get a top-up of £250. This is the amount of income tax they’d have paid to earn the £1000 in the first place. For basic-rate taxpayers, the tax relief is usually automatically added, whereas higher-rate and additional-rate taxpayers need to claim the extra amount they're entitled to through self-assessment or by writing to their local tax office. However, many workplace pensions use "salary sacrifice" which gives tax relief immediately, and there's also a National Insurance saving here for both the employee, and employer.

There are measures to limit the amount of money contributed to pensions each year. The Annual Allowance is £60,000; this includes individual, employer and third-party contributions, as well as any tax relief.