to help you make informed decisions about your wealth

Payback time

11 January 2019

Self Assessment gives savers the opportunity to claim money that is rightfully theirs.

For many people, January arrives with a familiar dread: Self Assessment.

Nearly 12 million people, primarily those with more than one source of income and the self-employed, are required to file a Self Assessment tax return each year.All tax returns for the 2017/18 tax year need to be completed online by the end of January, but with less than three weeks to go until the deadline, just under half haven’t got around to it, according to HM Revenue and Customs (HMRC).2

Self Assessment can involve quite a bit of preparation; whether it’s registering online, tracking down taxpayer references, or digging out invoices and bank statements. Get it wrong or submit it late and you could be faced with a fine. It's no wonder people approach Self Assessment with a sense of trepidation.

Nevertheless, with some careful planning, the process can be relatively straightforward. What’s more, it can provide you with the opportunity to maximise reliefs and exemptions, such as those associated with pension contributions.

“The idea of filling out a tax return can be daunting, but it's important that pension savers appreciate the sums they’re potentially missing out on if they fail to claim the money they are owed,” says Ian Price, divisional director at St. James’s Place. 

"Unfortunately, leaving Self Assessment until the last minute means that people are more likely to miss important details and make costly mistakes," he says.

It all adds up

Everyone automatically receives basic rate Income Tax relief, worth 20%, on their pension contributions. This means that an £80 contribution is automatically topped up to £100. For basic rate taxpayers, no further action is necessary. But higher and additional rate taxpayers are entitled to an extra 20% and 25% respectively. To receive the extra relief, they need to complete a Self Assessment tax return, or inform their local tax office.

“Where you are making contributions to a personal pension, including additional contributions over and above your workplace pension, you will need to claim the extra tax relief back yourself,” explains Price.

“Sadly, lots of people fail to claim what is rightfully theirs, simply because they don’t understand how the system works.”

Research suggests up to a fifth of middle and higher earners do not claim the extra relief owed to them. This means that hundreds of thousands of people who earn more than £46,350 a year [£43,430 in Scotland] are missing out on a significant tax-saving opportunity.3

Cash back

If you have failed to claim the extra relief in the past, you can still claim relief for the previous three tax years. However, if you are yet to claim tax relief for contributions made in the 2015/16 tax year, you need to act quickly. The deadline for paper forms has already passed, but those submitting forms online have until midnight on 31 January.

“For many people, getting on top of their finances is a key New Year’s resolution and claiming back tax relief via their Self Assessment tax return should be part of that,” says Price. “There are HMRC guidance notes and manuals online if you need help, but it might be worth getting an expert to help if you are unsure.”

Bear in mind that not all schemes operate tax relief in the same way. Some pensions take your contribution from your pay before any tax is deducted. This means you get any basic, higher and additional rate tax relief immediately and don’t need to claim any extra relief in your Self Assessment for those contributions. Many workplace pension schemes operate this way, but it’s worth checking with your employer if you are in any doubt.


The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.


1,2 HMRC, 2 January 2019 

3 True Potential, December 2016


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