UK households can boost their pension by up to £720 every year (Image: Getty)
UK households are being urged to add up to £720 in free tax relief to their each year with a little-known rule.
Ethical finance firm Path Financial says there are three things that can all trigger extra tax relief payments from which can significantly , but won’t cost you anything extra.
The firm says that a children’s pension, personal pension, or someone else paying into your pension can all lead to extra tax relief payments worth up to £720 per year.
Parents who pay into a children’s pension before they reach adulthood can pay in up to £2,880 per year, and the Treasury will then add up to £720 for free in tax relief.
The maximum amount you can contribute to your child or grandchild’s pension per year is £2,880, where the recipient doesn’t have their own earnings. These third-party contributions may also be exempt from inheritance tax if they meet certain criteria.
Similarly, if you have a pension and your partner, friend, relative or anyone else contributes up to £2,880 per year to your savings pot, then again this will trigger up to £720 in free tax relief from the Treasury. In addition, putting up to £2,880 per year in your own pension will also trigger tax relief payments of up to £720.
Rowan Harding, financial planner at Path Financial, says: “Essentially, if you put £2,880 in your pension pot in one year, you will be entitled to £720 in tax relief from the Government.
“This money can be accrued yourself, through friends or relatives contributing to your pot or for children, if their parents, guardians or those close to them contribute too. You can contribute using one of these ways or more, but you can’t get more than the £720 tax relief you’re entitled to.
“These three ways could prove lucrative in your old age if you start using them early because the more money you build up, allowing you to make a massive impact on the planet with your savings.”
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According to a new poll commissioned by Path, most young adults (51%) haven’t heard of green investing or that moving your investments out of polluting industries was possible.
The firm is advising people to consider switching to more eco-friendly investment pots as these can make a big difference for the planet.
David MacDonald, founder of Path Financial, adds: “Most people are unaware that you can move your pension so it aligns more with your ethics, and that should be what people are considering as well as how much is in it.”