More than 2.3 million missing out on a pension boost by not claiming tax relief

More than 2.3 million taxpayers are missing out on a pension boost by not claiming relief on their payments, research reveals.

Some 56 per cent of higher or additional rate taxpayers – equivalent to 4.9 million adults – pay into a personal pension, such as a self-invested personal pension.

But almost half of them don’t claim pension tax relief on their contributions, according to a freedom of information request by DIY investment platform InvestEngine.

The Government automatically tops up money paid into a personal pension by 20 per cent. But workers in a higher or additional rate tax band can also claim another 20 and 25 per cent, respectively, as this isn’t automatically added.

Andrew Prosser, head of investments at InvestEngine, says not claiming all eligible tax relief could ‘reduce pension pots by hundreds of thousands of pounds’, with £1.3 billion of tax relief going unclaimed between 2016 and 2021, according to the tax office.

You can claim relief on a self-assessment tax return, which was due on January 31. But you can still make backdated tax relief claims for up to four years’ worth of tax overpayments.