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If you’ve made any contributions to your pension, you should include this information on your Self Assessment tax return. Wondering why and how to do this? Read on!
Pension contributions are payments you make as a way of saving for when you decide to retire from working. There are different types of pensions.
For workplace pensions, your employer will enrol you into a pension scheme. Contributions are automatically deducted from your wages each month. Once you’ve reached retirement, you’ll be able to use your pension funds to pay for everyday costs.
The State Pension is led by the government. You need to have at least ten years on your national insurance record to qualify and can claim once you hit the tender age of… 66.
If you’re self-employed, you’ll pay into a private pension and will be able to retire a decade earlier than state pension allows. 😅
Well, it’s not compulsory. But yes, it is worth reporting any pension contributions on your tax return.
If you report your pension contributions on your tax return, you’ll automatically be entitled to a tax relief of 20% which is paid into your pension by the government.
20% is the basic rate. But if you’re a higher earner and pay more than 20% tax (either 40% or 45%) you could claim back up to 25% more.
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HMRC will basically give you back the tax that you paid on the income that you used for your pension contribution.
In your case you earned £49,000 and contributed £1,000 to your pension.
You get £250
Your pension provider will automatically get this for you and add it to your pension pot.
Your pension pot will now be worth £1,250.
If you don’t report your pension contributions on your tax return, HMRC won’t be aware of this information. In this case, you won’t get a tax relief (sob).
Not reporting pension contributions could also mean your tax return isn’t 100% accurate. Safe to say it’s best to report your pension contributions on your tax return!
🚨 Bear in mind, you can only claim tax relief for contributions if your pension scheme is registered with HMRC. 🚨
When filling in your Self Assessment tax return, you should come across a section called ‘tax reliefs’.
Look for where it says ‘payments to registered pension schemes where basic-rate tax relief will be claimed by your pension provider’.
(Yeah, it’s a bit of a mouthful.)
At this point, you’ll be asked for some information about your personal pension contributions. You’ll need to provide the value of your pension contributions (no need to panic, your pension provider should send you an annual statement with this information).
Don’t worry, all is not lost!
If you’ve completed your tax return and forgot to include your pension contributions, you can still log back in and make changes.
⚠️ However, you can only do this before the Self Assessment deadline which is the 31st January. After the deadline, you won’t be able to claim tax relief for your pension contributions. ⚠️
Of course! All you need is a pension summary which you can get by contacting your pension provider. One of our accountants will take care of the rest (tax relief included!).
Read more here!
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