Claiming for Tax Relief could Save Expats Thousands
People move overseas for all manner of reasons, but for many it’s the prospect of commanding a better salary and being able to afford a higher quality of life that appeals the most.
However, maintaining the quality of life you’re used to can be difficult once you’ve retired if your pension is lacking.
A recent report has warned that UK expats earning a high wage and paying into UK pension schemes could be short changing themselves by thousands of Pounds because of a failure to claim back the higher-rate tax relief they’re entitled to.
As one tax expert with Prudential stated; ‘Not claiming higher rate pension relief can significantly dent the value of a pension pot and there’s no reason why anyone should not ask for what they are due. After all, pension contribution relief is one of the main benefits of saving into a scheme.’
While all pension payments automatically accrue up to 20 per cent basic relief, for higher-rate taxpayers to receive the extra relief they have to complete a self-assessment tax return in the UK – something which many expats based overseas don’t believe they have to do.
In what is thought to be an underestimate, one prominent pension firm compiled data showing that over a quarter of employees with an annual income of over £40,000 aren’t claiming the additional pension relief – meaning that they miss out on adding an average of £1,255 to their pension funds every year.
And the amount is likely to be even higher for those stockpiling their funds in a self-invested pension plan or small self-administered scheme.
So, are you eligible for pension relief? Well, the extra relief is available to anyone contributing to a pension and meeting tax payments of 40, 45 or 50 per cent.
As the deadline for claiming extra pension relief is the end of October, if you think you’ve missed out on money you should be entitled to make sure you get in your application soon, and ask for backdated relief. (Payments will be issued on outstanding amounts dating back to 2009)
If you’d like more information seek the advice of a reputable financial advisor or contact the tax office.