Putting money aside into a pension pot (or multiple pension pots) is a great way to plan and save for the future. Most people in regular employment are automatically enrolled into a pension scheme by their employer, with their contributions managed for them. If you’re self-employed then the idea of setting up a private pension can seem a bit more daunting, because you’ll need to manage more of the process yourself.

Our Beginner’s Guide to Self-Employed Pensions explains the different types available. In this article we’ll answer some of the most frequently asked questions about showing your private pension payments on your tax return.

Do I need to tell HMRC about my pension contributions?

No, reporting any payments you make into a private pension isn’t compulsory, but you might find it beneficial. If you submit a Self Assessment tax return, then including the details of any contributions you make into a private pension scheme might mean that you’re able to claim more tax relief.

What are the benefits of reporting pension payments on my Self Assessment tax return

Employees have the benefit of additional pension contributions from their employer, but as a self-employed person you don’t have that same luxury. To make up for it, the government decided to step in by providing tax relief on the contributions you pay into a personal pension.

Pension contribution tax relief

Many pension providers will claim 20% in tax relief on your behalf every time you deposit a payment into your private pension pot. This is known as ‘relief at source’ and will be paid into your pension fund by the government.

If your pension scheme isn’t set up for automatic tax relief, or if you’re a higher earner paying more than the basic rate of tax, you could be claiming back up to a further 25% in pension contribution tax relief through your Self Assessment, or up to 28% if you’re a Scottish taxpayer (basically whatever tax rate you pay, minus the 20% basic rate).

The Annual Allowance means you can make up to £60,000 of contributions into a personal pension scheme before you need to start paying tax on them.
 

Tax relief on pension contributions in England, Wales, and Northern Ireland:

• 20% on income subject to the 40% higher rate of tax
• 25% on income in the 45% additional rate tax bracket

Tax relief on pension contributions in Scotland:

• 1% on income you pay the intermediate 21% tax on
• 22% on income you pay 42% tax on
• 25% on income you pay 45% tax on
• 28% on income you pay 48% tax on

This can only happen if you report your pension contributions on your tax return. If you don’t declare your pension payments, HMRC won’t know to give you any tax relief on them.

How do I declare personal pension contributions on my tax return?

Your Self Assessment tax return will include a heading which deals with ‘tax reliefs’. Find the section that says ‘payments to registered pension schemes where basic-rate tax relief will be claimed by your pension provider’.

Your pension provider will normally send an annual statement, and you can use this information to enter the value of your pension contributions so HMRC can work out how much tax relief you are entitled to.

 
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