Hello, I'm Judith Fraser, Head of Customer Marketing at Standard Life.
I’m passionate about helping people make the most of their money.
The end of the tax year is just around the corner – and every year, people are missing out on valuable pension tax relief, with millions of pounds left unclaimed.
But don't worry there’s still time to make the most of your pension plan’s tax benefits before the fifth of April.
Here are three smart moves you can make today, before it’s too late.
Each year, there’s a limit on how much you can pay into your personal pension without facing a tax charge. This is called your pension annual allowance. For most people, that amount is sixty thousand.
If you didn’t use all of your allowance in previous years, you might be able to ‘carry it forward’ and contribute more now.
This can be really helpful if you want to make a bigger one-off pension contribution, such as from a bonus. You can check with your pension provider— online or by phone—about how to make one-off payments.
Salary sacrifice is something you arrange through your employer, where you agree to exchange part of your salary for pension contributions.
By lowering your salary – in effect reducing your taxable income – you’ll pay less in Income Tax and National Insurance. This can be a tax-efficient way to strengthen your pension pot, without significantly reducing your take-home pay.
You’ll need to arrange salary sacrifice through your employer before the fifth of April for it to count for this tax year.
Salary sacrifice is currently one of the most tax-efficient ways to save. But do take note, from April 2029, the national insurance contribution exemption will only apply to the first two thousand pounds of salary sacrificed each year.
Remember to check how this would affect any other benefits or mortgage or loan affordability.
When you pay into a personal pension—one you may have opened yourself or through an employer—you get tax relief. This means your payments get topped up by the government.
If you’re a basic-rate taxpayer, you get twenty percent tax relief automatically added to your pension. So if you contribute eighty pounds, the government adds twenty pounds.
If you’re a higher-rate taxpayer, you can claim an extra twenty percent by submitting a self-assessment. So if you contribute eighty pounds, the government adds forty pounds in tax relief.
You’ll need to make any contributions before the fifth of April to qualify for this year’s tax relief, but check with your provider for any earlier cut-off dates, as some actions may take time to process.
Tax and savings rules can change over time, and recent Autumn Budget announcements mean updates are on the way.
These changes could affect how you save and stay tax-efficient, so it’s important to keep informed.
Acting now can help you make the most of today’s opportunities before new rules take effect.
