HMRC warning for five million UK households who are missing out on 'tax relief'
A HMRC warning has been issued to five million UK households who need to come forward for tax relief. Households have been reminded of four ways completing a tax return can help boost your savings ahead of the January 31 self assessment deadline.
Lisa Picardo, chief business officer at PensionBee commented: “It’s estimated that over five million taxpayers are yet to fill out their Self-Assessment form for the previous tax year, so getting your ducks in a row before January 31 is crucial.
“For many, completing a tax return could unlock unexpected pension benefits. If you’ve changed jobs, started self-employment or entered a higher tax bracket, filing ensures you don’t leave valuable tax relief unclaimed.”
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Higher earners can claim extra tax relief, she revealed. Ms Picardo said: “If you earn more than £50,270 and pay into a ‘relief at source’ pension, you might need to fill out a Self-Assessment return to claim your extra tax relief, which is an estimated £425 on average for a higher rate taxpayer.”
UK households are also reminded they can c arry tax relief forward. Ms Picardo said: “To use carry forward, you must have been a member of a UK-registered pension scheme in the tax years you wish to carry forward from.”
Pension contributions can reduce taxable income for some, too, she added. Ms Picardo said: “Contributions are treated as a personal expense eligible for tax relief rather than a business expense, so they reduce your taxable income directly.
“For example, if you earn £60,000 and make £10,000 in pension contributions, your taxable income is reduced to £50,000, potentially lowering your overall tax bill. Unlike employees in workplace schemes, who typically receive automatic tax relief, self-employed individuals need to claim this relief actively, usually through Self-Assessment.”
Ms Picardo said: “It’s essential to check with your employer or financial adviser to confirm that tax relief has been applied to your pension contributions - or if a claim needs to be made. Even if you’re not eligible for additional tax relief this year, reviewing your income, savings, and tax situation holistically ensures you’re making the most of available opportunities and could help avoid missing out on future benefits.”