Missing out on higher rate relief
Some new research from Standard Life has found that around 250,000 higher rate taxpayers are missing out on the full tax relief available on their pension contributions. In some cases they have been missing out for several years.
Higher rate income tax relief on pension contributions has been under attack by the Government recently.
The introduction and then subsequent tightening of the anti-forestalling rules to restrict this tax relief for higher earners was part of a series of tax changes designed to penalise higher rate tax payers.
This additional income tax relief remains a valuable benefit, but must be claimed for it to be effective.
Under current rules, it is possible to make a backdated claim for this higher rate tax relief going back up to six years. From 5th April 2010, you will only have four years in which to reclaim the tax relief.
Reclaiming higher rate income tax relief on pension contributions is relatively straightforward. You can complete a self assessment tax return or notify your local tax office so they can change your tax code.