Tax updates - Wright Vigar
 In Advice, Blog, News, Tax Tips

Higher earners miss out on £1.3bn in pension tax breaks

Over the past five years, hundreds of thousands of higher earners have failed to collect more than £1 billion in pension tax breaks.

All pension savers are entitled to tax relief on the money they contribute to their retirement accounts at the same rate that they pay income tax. The first 20 percent is given automatically, but people who pay higher income tax rates of 40 and 45 percent must actively claim the additional relief.

PensionBee revealed that an alarming three out of four higher-rate taxpayers failed to do this between 2016 and 2021, leaving £1.3 billion in the hands of the taxman.

Unlike basic rate tax relief, you will need to actively claim higher rate tax relief on your pension contributions. You can do this in two ways, either through your self-assessment or by contacting HMRC directly.

You can also make backdated claims for higher rate tax relief on your pension contributions, but there is a time limit. You can only claim back any tax relief for the last four tax years.

UK tax authority launches crackdown on holiday let owners

HMRC has launched a clampdown on the short-term lettings market by targeting about 1,000 property owners they expect have not paid enough tax.

HMRC’s inquiries come as the holiday rentals market has rapidly grown in recent years, helped by the preferential tax treatment of short-term lettings compared with traditional buy-to-let rentals.

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