Higher tax relief stays unclaimed: Prudential
Almost six out of 10 higher rate taxpayers are failing to claim their full tax relief from pension contributions and are missing out on £295.8m a year, research for Prudential has found.
An online poll of 2033 adults found that 59 per cent of taxpayers earning more than £42,500 a year failed to claim higher tax relief.
This equated to an average of £1020 each for more than 290,000 people, money which could be otherwise used to supplement their retirement pot.
The research also showed that just 19 per cent of higher rate taxpayers knew whether they had claimed tax relief or not, while only 22 per cent of respondents said they did claim all the pension tax relief they were entitled to.
Matthew Stephens, head of technical product and sales at Prudential, urged higher-rate taxpayers to claim on what they had missed out on.
He said: “Those who don’t need to do a tax return can claim for relief for as far back as 2008/2009 if they act before the end of October 2012.
“It’s astonishing that so many people fail to claim this valuable tax relief, which could help enormously in meeting the cost of retirement.
“Surely no one would knowingly turn their nose up at a potential £1020 extra tax saving?”
Mike Pendergast, IFA with Cheshire-based Zen Financial Services, said: “I have had a number of new clients with defined contribution and group pension schemes who are not aware of this rate relief.
“The problem is that nobody is advising them.
“If they set up pensions independently they might not be aware of higher rate relief, so it could be easily missed.
“The obvious thing to do should be to get some advice and check your existing schemes, but I also think it should be brought to wider attention through the likes of the Money Advice Service.”