Pension savers are generously rewarded by the taxman for saving for the future, so you may want to consider paying a bit extra into your pension before the end of the tax year to benefit from tax relief.
For example, if you’re a basic rate taxpayer and you pay £80 into your pension, HMRC will top this up to £100, and if you’re a higher or additional rate taxpayer, you’ll receive even more tax relief on your contributions, which you can claim back through your self-assessment tax return. Find out more in our article How pension tax relief works.
There’s always lots of speculation that the Chancellor might restrict pension tax relief, so if you’re considering paying into your pension you might want to think about acting sooner rather than later. Bear in mind that there’s a maximum amount you can pay into your pension each tax year. This tax year (2021/22) you can claim tax relief on pension contributions of up to £40,000 or 100% of your income, whichever is lower. Find out more in our guide How do pension allowances work?
If you have unused annual pension allowances in recent tax years, you may be able to use these this tax year under carry forward rules. Learn more about these in our guide Pension carry forward explained.
Even if you’re not currently earning, and if you can afford to, you can make pension contributions of up to £3,600 each tax year. You only have to pay in £2,880 and the State will top this up by £720.