12:53 am - February 5, 2026
As the self-assessment deadline of 31 January approaches, many taxpayers are preparing their submissions, but higher-rate taxpayers may be missing out on significant pension tax relief. According to recent data, an estimated £1.3 billion worth of pension tax relief went unclaimed between 2017 and 2022, highlighting a widespread issue that could be costing individuals thousands of pounds in retirement savings.
The deadline for self-assessment falls at 11:59pm on 31 January, providing a crucial opportunity for taxpayers to reclaim unpaid tax relief on their pension contributions. While basic-rate taxpayers typically receive their full entitlement automatically, higher and additional-rate taxpayers often need to actively claim the additional relief they are owed.
Understanding Pension Tax Relief Rates
Pension tax relief is applied at an individual’s marginal income tax rate. For basic-rate taxpayers, this means 20% relief on contributions, so a £100 pension contribution only costs £80 from their pocket. However, higher-rate taxpayers paying 40% tax should only pay £60 for the same £100 contribution, while additional-rate taxpayers at 45% would pay just £55.
In Scotland, additional tax bands mean some taxpayers could qualify for different rates of relief. The amount of relief available depends entirely on individual circumstances and the specific tax band applicable to each person’s income.
How Pension Arrangements Affect Tax Relief
The way taxpayers receive their relief depends on the type of pension arrangement they have. Under salary sacrifice or net pay arrangements, contributions are deducted before income tax is calculated, meaning full tax relief is automatically applied.
In contrast, relief at source arrangements work differently. Contributions are taken from salary after tax, with employers deducting 80% of the contribution and reclaiming the basic 20% from HMRC. Additionally, many private pensions including Self-Invested Personal Pensions, as well as some workplace schemes, operate under relief at source rules.
For higher-rate taxpayers in relief at source arrangements, the additional tax relief beyond the basic 20% must be claimed manually. This represents the primary reason why billions in tax relief go unclaimed annually, according to industry experts.
Making a Claim for Higher-Rate Tax Relief
Higher-rate taxpayers can claim their additional pension tax relief through the self-assessment form in the section labelled tax reliefs. Claims can be backdated for up to four years, potentially recovering substantial amounts for those who have been unaware of their entitlement.
Those who do not complete self-assessment forms can still claim relief online through the government website or by post. Pension providers advise keeping old pension statements as proof of contribution dates and amounts when submitting claims.
Meanwhile, taxpayers have the option to receive their rebate either by cheque or direct bank transfer. Many financial advisers recommend reinvesting the recovered tax relief directly back into pension savings to maximize long-term retirement benefits.
Checking Your Pension Arrangement
Uncertainty about which type of pension arrangement applies is common among savers. Taxpayers unsure about their pension structure should contact their pension provider or human resources department to confirm whether they have a relief at source or net pay arrangement.
This information is crucial for determining whether additional action is needed to secure full tax relief entitlement. Pension and tax rules can change, and benefits depend on individual circumstances, with pension access typically available from age 55, rising to 57 in 2028.
With the 31 January deadline rapidly approaching, higher-rate taxpayers contributing to relief at source pensions should verify whether they need to submit claims. Those who miss this deadline can still make claims in subsequent tax years, though delays mean missing out on potential investment growth in the interim.
