Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice.
Are you losing out on valuable tax relief? Members of certain pension schemes don’t receive automatic tax relief so it’s their responsibility to claim it. Read on to find out what you need to do to ensure you’re taking advantage of all the tax help HMRC offers.
Do you know your entitlements to claim back tax?
A surprising amount of taxpayers don’t currently claim additional relief they are entitled to. Whether it is because they aren’t aware they can claim further relief or they are simply under the impression that their employer will do so for them, the simple fact remains that HMRC is benefiting from the oversight.
If you consider that you can reclaim money owed to you over the past three years, you could potentially be missing out on a considerable sum.
For normal occupational and trust-based schemes, pension contributions are typically deducted from your salary on a pre-tax basis. You automatically receive the tax relief as you don’t pay any tax on the money you contribute. How much relief you get is based on your highest rate of income tax – 20% for basic-rate taxpayers, 40% for higher-rate taxpayers, and 45% for additional-rate taxpayers.
Personal pensions and contract based schemes
However, for individuals enrolled in group personal pensions and contract-based schemes, the members must seek out the additional relief themselves.
With these schemes, your contributions are collected after tax has already been taken, but at 20%, so those in the higher-rate and additional-rate tax brackets need to claim back the additional tax owed to them from HMRC.
Even though you can only claim relief from your personal contributions and not your employer’s contributions, it is still worth the effort.
If you already complete a self-assessment tax return then recouping the extra relief is as easy as filling out a form.
For additional rate taxpayers, this is the only recourse for getting the 25% supplementary relief.
Unfortunately, most individuals don’t currently use the self-assessment form so in order to get their extra 20% they need to contact HMRC via phone or letter and inform them of the contributions already made.
There’s no question that paying tax is a certainty of life, but that doesn’t mean you should be paying any more than you need to.
At Dental & Medical Financial Services, our goal is to ensure that you’re saving or reclaiming as much tax as possible.