When something feels like too much hassle, we tend to put it off or ignore it altogether. Yet, doing this with your pension admin could be costing you far more than you imagine.

If you’re a higher earner, inactivity surrounding your pension savings could mean you’re leaving money on the table (or more precisely with HMRC).

Because higher- and additional-rate taxpayers have to jump through more admin hoops to claim all the tax relief they’re owed, high earners often fail to claim all the available tax relief, meaning many miss out on big sums.
 
In fact, according to figures from Actuarial Post, between 2016/17 and 2020/21, high-earning Brits failed to claim a staggering £1.3 billion. [1]
 
So, if you’re a higher- or additional-rate taxpayer, spending a little more time completing your self-assessment could pay off – especially when you factor in the potential impact of compound returns on your pension savings over time.

If this is ringing alarm bells for you, take action today.
 
You can claim relief dating back four tax years. So, in the 2025/26 tax year, you can claim for relief dating back to 2021/22.
 
A quick refresher on the benefits of pension tax relief

When you contribute to your pension, the amount you pay in is immediately boosted by the tax relief you receive:

Here’s how it works in practice:

Imagine you’re a higher-rate taxpayer earning £80,000, and want to contribute £10,000 to your pension.

• You pay £10,000 from your take-home pay.
• Basic-rate relief (20%) is added automatically, so £12,500 goes into your pension.
• To get the extra 20% higher-rate relief, you must then claim £2,500 via self-assessment.

Again, for higher- and additional-rate taxpayers, having to claim the tax relief you’re owed on your pension payments can feel like more trouble than it’s worth. 

The problem is, over time, the money you leave unclaimed will mount up.

You may receive your tax relief as:
•    A change to your tax code
•    A rebate at the end of the year
•    A reduction in your tax liability.

If you don’t want to claim through self-assessment, you can write to your tax office detailing the pension contributions you’ve paid. You’ll need to send a new letter every time you change your pension contributions.

Salary sacrifice could ease the admin burden

If you’re employed and your employer offers a salary sacrifice scheme, this could present an ideal solution.

Salary sacrifice is essentially an arrangement between you and your employer where you agree to forgo part of your salary. The agreed amount is then paid directly into your pension.
 
Since your employer deducts the payment from your gross pay, Income Tax and National Insurance (NI) are typically handled automatically.
 
How salary sacrifice works in practice

Following the same example as above, imagine you’re a higher-rate taxpayer earning £80,000, and you want to contribute £10,000 to your pension.

• You agree to reduce your gross salary to £70,000, and your employer pays £10,000 straight into your pension.
• Income Tax is calculated on £70,000, so the full 40% relief is received instantly.
• No self-assessment claim is needed.
• Both you and your employer save on NI contributions. 

Ensuring you’re making the most of tax-efficient pension contributions can be complex, especially if you’re a high earner.
 
Working with a financial planner could help you maximise both pension tax relief and other available annual allowances – saving you time and money.

Get in touch
If you’d like to know more about how you can make the most of pension tax relief and save for the retirement you want, please get in touch.
Email [email protected] or call us on 0800 048 0150.

Please note
The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation for any investment or retirement strategy.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
 
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
 
Workplace pensions are regulated by The Pensions Regulator.