Self-assessment

Many believe only the self-employed and those with loads of investments must fill in a self-assessment tax return, but this isn't the case.

If you have, and you don’t have enough annual allowance from the previous three tax years which you can carry forward, you’ll be subject to a tax charge. If you go over the annual allowance, your pension provider will send you a statement. However, you could still benefit from saving more than your annual allowance into your pension while still benefitting from tax relief. If you’ve potentially breached your annual allowance in your pension, it’s important to let HMRC know through your tax return. This can also reduce your annual allowance to as low as £4,000. If you’ve already taken income from your pension, you might have triggered the money purchase annual allowance. However, if you’re a high earner or have already accessed your pension, your annual allowance will be lower. You can also let HMRC know if you’ve breached your annual allowance pension contribution limit using a tax return. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in. This means your personal allowance is zero if you earn £125,140 or more. But if you’re a higher (40%) or additional-rate (45%) taxpayer, you’ll need to claim the extra 20% and 25%. It’s important to include the gross value of your pension contributions.