Tax warning as thousands could be missing out on £97,000 in pension savings

Eligible savers have just days left to claim relief on their contributions for the previous year, experts have warned.

While 20% tax relief is automatically applied to pension contributions, higher-rate taxpayers can claim an additional 20%, bringing their total tax relief to 40% through a self-assessment tax return.

Additional-rate taxpayers can claim an extra 25%, raising their total tax relief to 45%. However, many may not realise they must actively claim the relief – it’s not automatic.

New calculations from show that a higher-rate taxpayer contributing £10,000 to a private pension in a single tax year could miss out on £2,500 by failing to claim their full tax relief.

This missed relief could result in £34,158 in lost pension wealth over 10 years and up to £97,278 over 20 years.

The calculations assume the additional tax relief is reinvested in a pension, achieving 5% annual growth (net of fees), with contributions increasing by 2% per year (in line with the inflation target).

With projected for the 2024/25 tax year, experts warn that failing to claim full tax relief could result in missed savings for a significant number of people.

Myron Jobson, senior personal finance analyst at interactive investor, said: “Not claiming the additional pension tax relief is a significant financial own goal – one that could have a lasting impact on your quality of life in retirement.

“Claiming the additional tax relief available to higher-rate taxpayers through a self-assessment tax return can supercharge your pension savings over the long term.

“By reinvesting this extra relief back into your pension, you not only bolster your retirement pot but also harness the power of compounding growth.”

Mr Jobson added that each additional contribution benefits from tax-efficient growth over the years, “potentially leading to a significantly larger pension fund” when people retire.

He noted: “Many people don’t realise there are extra steps required to claim the full 40% tax relief.

“If you don’t normally complete a tax return, you can still write to with details of any private pension contributions you’ve made during the year to claim the additional tax relief.”

For higher-rate taxpayers contributing to a relief-at-source workplace pension scheme, it’s important to note that the extra tax relief isn’t applied automatically – they’ll also need to claim it.

People can claim any missing tax relief from the previous three tax years. Checking any pension contributions made during that period is key to ensuring they’re not losing out on potential .

Research by PensionBee estimates that in the five-year period between 2016 and 2021, was left to in unclaimed tax relief from higher and additional rate taxpayers.

The deadline to file a tax return for the 2023/24 tax year is Friday, January 31.

How do you submit a tax return?

To register for online self-assessment, you’ll need your Government Gateway user ID and password.

If you don’t already have a Government Gateway account, you can create one when you first visit the self-assessment section on the website. During this process, you’ll set up a user ID and password, and you’ll be sent a 10-digit Unique Taxpayer Reference (UTR) number by post.

Along with your UTR, you’ll receive an activation code, which may take up to 10 days to arrive. You must activate your account within 28 days of receiving the code, or it will expire. Once activated, you’ll be able to use the online service to submit your tax return.

Alternatively, you can submit your return by post.

Myrtle Lloyd, ’s director general for customer services, said: “We know completing your tax return isn’t the most exciting item on your New Year to-do list, but it’s important to file and pay on time to avoid penalties or being charged interest.

“The quickest and easiest way to complete your tax return and pay any tax owed is to use ’s online services – go to and search ‘Self Assessment’ to get started now.”