If you are a high-earning expat and paying into UK pensions, you are entitled to Pension Tax Relief in addition to the 20% basic tax relief you are already getting. Pension firm Prudential believes 26% employees earning more than £41,451 a year do not claim the pension tax relief, missing out on the additional £1255 that could go into their pension fund annually.
The problem of missing out on additional tax relief arises when expat workers who are tax resident in the UK believe they do not have to make tax returns. According to Prudential an estimated 180,000 over 40% tax rate payers who are also contributing to pensions are not claiming the extra pension tax relief - resulting in a whopping £229 million going unclaimed.
How to claim?
Just a simple self-assessment tax return filed in UK could give an additional relief for the high tax-paying expats. If you are entitled a pension tax relief and haven’t claimed it, time is running out as the deadline for making claims is October 31. By making a claim before the deadline you can even ask for the unpaid tax relief dating back to August 2006. You can even file the returns online; however for tax relief claims for dates before August 6, 2012, you will have to write to the tax office.
Who can claim?
If you are contributing to a UK pension and paying a tax rate of over 40%, you can claim pension tax relief.
Prudential’s tax expert, Clare Moffat believes by not claiming the additional tax relief, the higher rate tax payers are missing out on a significant contribution to their pension pot. After all, pension tax relief is one of the main benefits of saving into a scheme.