Letting it all go to pot

FIVE-MINUTE GUIDE TO... CLAIMING PENSION TAX RELIEF

- By Harvey Jones

CHANCELLOR Rachel Reeves is said to be considering cutting tax relief on pension contributions in her November Budget, but millions already miss out because they fail to claim every penny due on their contributions.

Pension tax relief is generous as it’s paid at 20%, 40% or 45%, depending on your tax bracket.

So each £100 that goes into your pot could cost as little as £45. It costs the Treasury almost £70billion a year, making it a juicy target for the Chancellor.

Basic-rate taxpayers get their relief automatically, but higher and additional-rate taxpayers often need to claim the difference on their self-assessment tax return.

It’s important to work out which one applies to you. Workplace “net pay” pension schemes give you full relief at source because contributions go in before tax.