Higher earners are missing out on hundreds of millions of pounds in unclaimed pension tax relief each year, according to digital pension provider Penfold.
The firm reckons the majority of those earning more than £50,270 fail to claim the extra 20%–25% pension tax relief they’re entitled to, because it doesn’t happen automatically.
As a result, individuals could be losing hundreds or even thousands of pounds annually, Penfold said.
The company pointed out that basic-rate taxpayers automatically receive 20% tax relief on contributions, but higher-rate (40%) and additional-rate (45%) taxpayers must claim the remainder themselves.
Chris Eastwood, CEO and co-founder of Penfold, said: "With HMRC now offering a streamlined online claims process and allowing claims to be backdated for up to four years, higher-rate taxpayers must check whether they’re leaving free money on the table."
He pointed out that in 2025 HMRC introduced a streamlined online service, replacing the older, slower manual claims process.
It means taxpayers can now claim higher-rate or additional-rate relief through the HMRC online service or through their self-assessment tax return.
Eligible individuals can even backdate claims for up to four previous tax years.
Mr Eastwood said most workplace pensions automatically apply tax relief at people’s highest rate, depending on contribution arrangements such as net pay, relief at source, or salary sacrifice. Where this does not happen, employees can still claim extra relief themselves, he added.