Over 1 in 10 (13 per cent) of Brits have a relief at source pension, which could put that at risk of overpaying tax if they are higher rate taxpayers, a survey from Finder.com has revealed.

The research also found that 27 per cent of respondents with workplace pensions do not know how their pension is set up, increasing the risk of overpayment.

Meanwhile, the research found that among higher-income taxpayers, almost 5 per cent of respondents, or 2.4 million Brits, either have a relief at source pension or do not know how their pension is set up.

Finder.com explained that while pension contributions qualify for tax relief, higher-income taxpayers using relief at source pensions overpay tax unless they claim additional relief via tax returns or a rebate.

Additionally, Finder.com pointed out that while a relief at source pension accounts for basic rate tax, higher rate taxpayers are entitled to reclaim more due to their higher tax rate.

However, PensionBee research from last year found that 76 per cent of eligible higher-income taxpayers did not claim a pension rebate.

Finder.com research also noted that Nest opts for a relief at source rather than a net deduction system, which it warned could leave high-income taxpayers overpaying tax unless they are aware of the potential rebate or file a tax return.

When asked by Finder.com why it used relief at source pensions, Nest said: “We believe it’s in the best interests of our members” and that “the percentage of Nest members eligible for higher rate tax relief is very low”.

Finder.com explained that taxpayers can only claim pension-related tax rebates for the past four tax years, resulting in many individuals losing “significant” amounts in overpaid tax.

The research showed that a person earning £90,000 per year and contributing 5 per cent to their workplace pension annually for 10 years should be able to claim £11,250.

However, this person could only claim £4,500 due to the four-year claim limit, resulting in £6,750 in unclaimed overpaid tax.

Commenting on the research, Finder.com personal finance expert, George Sweeney, said: “This is a significant flaw in the pension system that amounts to the stealthiest of stealth taxes.

“The fact that a lot of people will have to claim money that is rightfully theirs is frustrating in itself but the process of claiming a rebate isn’t easy either.”

Sweeny urged the government and pension providers who do not “support” net deductions to do “more” to raise awareness.

“The fact you can only claim the rebate for the previous four tax years makes it particularly important that people find out as soon as possible and act with urgency to make sure they get back any tax they’re owed,” he added.

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