Did you know you can take advantage of tax relief from the contributions you make to company and personal pension? This means that your contributions will be topped up with extra money from the government. Typically, the higher your tax rate is, the bigger your tax relief will be. For example, if you are a basic tax payer you need to contribute around £80 to see £100 reflected on their pension. On the other hand, individuals with higher tax rate need only contribute £60 to see £100 on their account.
Basic taxpayers automatically get the tax relief since the personal or company pension firm will take care of it for you. The downside to this is that you will need to reclaim the difference between the basic and the higher tax rate when you submit the self assessment tax form. On the other hand, claiming the tax relief is more complicated for individuals with higher tax rates since they will need to submit several documents before the tax relief is finally reflected on their account.
Pensions are one of the few ways you can get tax relief from the government. Unfortunately, there already are rumors saying that tax relief for individuals with higher tax rate will be removed soon. At present, tax relief for those with incomes over £150,000 is fixed at 20% while those with incomes over £180,000 can no longer take advantage of this benefit. So save up today and secure your future. Get pension advice from the experts!