Taxpayers missing out on over £800m a year in unclaimed tax relief

Eighty per cent of higher rate taxpayers are missing out on unclaimed personal pension tax relief amounting to over £800m a year, new research by PensionsBee has revealed.

The research found that an estimated 54 per cent of additional rate tax payers are also leaving tens of millions of pounds to HMRC after failing to claim tax relief on their self-assessment tax return.

In 2016/17, this unclaimed tax relief equated to over £820m, increasing to over £830m in 2017/18.

Commenting on the research, PensionsBee CEO, Romi Savova, said: “A lack of awareness of how the tax relief system works means that too many people are missing out on one of the key benefits of pension saving.

“While relief for basic rate taxpayers is automatically added to a pension as a tax top up, any further tax relief owed to higher and additional rate taxpayers must be claimed through self-assessment. This is yet another reason why the pensions system is in need of dramatic simplification.”

The HMRC recently repaid more than £32m in emergency pension tax to savers who withdrew money from their pensions in Q4 2019.

This also follows a number of issues surrounding pensions taxation, with the NHS scandal bringing attention to issues stemming from the annual and tapered allowances.

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