Item 2: Decide if you want to top up your pension
Consider boosting your pension before the end of the tax year. If you’re employed and contribute to a company pension, check how much you’ve paid in. Many employers will match contributions up to a particular cap, so it’s worth taking advantage of this.
The more income tax you pay, the greater the tax relief on pension contributions. If you’re a basic rate taxpayer, for every £800 you pay in, the taxman will top it up to £1,000. If you're a higher or additional rate taxpayer you can claim back up to an additional 20%, or 25% on top of the 20% basic rate tax relief, through your tax return.
For most people, tax relief is available on pension contributions of up to £40,000 per tax year, or 100% of your income, whichever is lower. Your annual allowance will be tapered if you earn more than £200,000 and your income and pension contributions made on your behalf exceed £240,000.3
Even if you don’t pay tax, you’re still entitled to receive basic rate tax relief on pension contributions. The maximum you can pay into your pension as a non-taxpayer is £2,880 a year, which is equivalent to a £3,600 contribution once you include the available tax relief.
The minimum pension age you can access your private pension savings is currently 55. However, the Government have announced an intention to link this age to 10 years prior to the State Pension Age. If this passes into law, the minimum pension age will increase but bear in mind these pension tax rules can change in future and their effects will vary depending on your personal circumstances.