Over 800,000 higher earners in the UK are missing out in around £1.4bn in pensions tax relief, new data suggests.
Around 6.8 million people paid into a pension via ‘relief at source’ in 2023/24, according to data obtained through a freedom of information request to HMRC by consultancy LCP. But around 19% of taxpayers in that year were higher or additional-rate earners, which would mean around 1.1m people should be claiming pensions tax relief.
Everyone gets basic rate tax relief in the UK, but higher earners getting tax relief via relief at source must claim the extra back from HMRC.
However, the FOI data shows only around 316,000 higher earners claimed pensions tax relief in the year, while just 151,000 additional-rate earners did so. According to the figures from LCP, around 1,123,000 higher-rate earners qualify, as well as 170,000 additional-rate earners.
That means around 807,000 higher-rate earners and 19,000 top earners could be missing out on extra money in their pensions.
“With more and more people being dragged into higher rates of income tax, it is increasingly important that they claim all the tax relief to which they are entitled,” said Steve Webb, former UK pensions minister, now partner at LCP.
A HMRC spokesperson said: “We want everyone to claim the tax relief they’re entitled to. We encourage higher and additional rate taxpayers, who have received basic rate tax relief at source on their pension contributions, to claim further relief via Self Assessment or by contacting HMRC.”
