Every year millions of pounds of tax reliefs remain unclaimed by higher rate taxpayers in respect of personal contributions made to pensions. A study conducted by insurer Prudential (June 2014) found that approximately one in five higher rate taxpayers (around 900,000 people according to HRMC data) eligible for relief on their pension contributions are failing to claim it, resulting in an annual unclaimed amount of approximately £225 million.
And amid speculation that the Government will scrap higher rate tax relief on pensions in the March 2016 Budget, and move to a flat rate of tax relief on pensions, now could be the time to act and claim these rebates.
With this in mind, a new website – Taxreliefs.co.uk - has been developed to help higher rate taxpayers reclaim tax relief they may have missed out on, and can be backdated for up to three previous tax years. Taxreliefs.co.uk offers users a step-by-step process to claim tax rebates for pension and gift aid relief. As long as pension contributions have been made by an individual rather than an employer, and not through a salary sacrifice arrangement, higher rate taxpayers will be entitled to a tax rebate as they will have only received basic rate relief on their contributions to date.
The website aims to remove the hassle of the reclaim process by calculating the rebate amount and generating a letter confirming the amount and other relevant information, so that HMRC can process the claim. The claimant will need to submit proof of contributions with the claim letter generated by the website. Taxreliefs.co.uk will apply an administration fee of £20 to generate the letter and send to the claimant. Upon receipt of the letter, it is estimated that the HMRC will process the claim within eight to 12 weeks.
Debbie Mahanta, business development director at Tax Reliefs UK, said: “The amount of unclaimed relief each year is staggering. Many people overlook tax reliefs applicable to them as they automatically assume the PAYE system taxes them correctly and makes adjustments for rebates and reliefs due, which it does not. The amounts of these rebates can rack up very quickly and, in a time of stagnating salaries and low interest rates, claiming what is rightfully yours must be a priority.
"We developed this website to raise awareness about both pension relief on personal pension contributions and gift aid relief on charitable contributions, and to make the reclaim process as painless, simple and clear as possible. So we urge higher rate tax payers to act now before end of this tax year (5 April 2016) as they could be pleasantly surprised at how much they’re owed, and in this economy every little bit helps.”
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