HMRC Tightens Pension Tax Relief: What You Need to Know
From 1 September, HMRC has introduced stricter rules for claiming pension tax relief. The changes are aimed at reducing incorrect claims, many of which came from basic rate taxpayers. If you’re entitled to additional relief on your pension contributions, it’s important to understand what’s changed and what you’ll now need to do.
Why HMRC Is Cracking Down
HMRC recently reviewed claims made through PAYE tax codes. They found that about a third were incorrect. In some cases, taxpayers had already received full relief through salary deductions. Others were ineligible to claim extra relief at all.
A common issue was that people guessed their pension contribution figures instead of using official statements from their provider.
To address these problems, HMRC has overhauled the claims process.
What’s Changing from 1 September
The most notable change is that claims can no longer be made by phone. Most people must now apply online. Every claim must also be supported by evidence, even if the total amount contributed was less than £10,000.
Here’s a quick summary:
- All claims must include documentation each tax year.
- For personal pensions, this means a letter or statement from your provider confirming the amount paid.
- Postal claims are only allowed if you can’t apply online.
- If you file a self-assessment tax return, you’re not affected. You can continue to claim as usual on your return.
You can read the official HMRC guidance on claiming pension tax relief.
Who Can Claim Pension Relief?
If you live in Scotland and pay tax at the intermediate, higher, or top rate, and you contribute to a personal or workplace pension, you may be eligible for additional relief.
For example, someone paying the top rate of tax in Scotland can claim an extra 25% relief on qualifying contributions.
You might also qualify if your employer doesn’t apply full relief automatically.
We cover questions like this regularly as part of our broader tax planning services, especially where recent rule changes have introduced new steps or created uncertainty.