Last chance for 2022/23 pension contributions
5th April 2023 is the final date for pension contributions in the 2022/23 tax year.
For any higher earning sole traders, partners and individuals, now is the time for a final review in order to maximise your tax relief before the year end.
Tax relief is paid on your pension contributions at the highest rate of income tax you pay. So:
- Basic-rate taxpayers get 20% pension tax relief
- Higher-rate taxpayers can claim 40% pension tax relief
- Additional-rate taxpayers can claim 45% pension tax relief
For example, a higher rate payer would be able to contribute £10,000 to their pension scheme at the cost of £6,000. This is because they would get tax relief at 40% on the contribution.
How much relief can I claim?
There is an annual limit on the amount of pension contributions on which you can earn tax relief. This is called the pensions annual allowance.
This limit was set at £40,000 for the tax year 2022-23.
If you make pension payments over the £40,000 limit, the excess will be subject to income tax at the highest rate you pay.
However, you can carry forward unused allowances from the previous three tax years providing you were a member of a pension scheme during those years.
This means that you can potentially claim up to £160,000 worth of relief this year.
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