The UK government offers pension tax relief as an incentive to encourage individuals to save for retirement. With the relief, the individuals can make contributions from income either through a net pay arrangement (before tax is applied) or relief at source (after the tax has been deducted), where the pension provider claims tax relief on their behalf. Thus, as the government adds tax relief to individuals’ pension contributions, their savings grow more effectively over time. Recently, HMRC has updated and introduced new measures for how tax relief claims are processed. This blog will explain the updates that HMRC has launched in order for the eligible employees to claim pension tax relief.
What Are HMRC’s New Rules For Pension Tax Relief Claims?
On September 1, 2025, HMRC introduced key changes to the way PAYE taxpayers claim pension tax relief in order to reflect its ongoing push towards digitalisation.
The new measures include:
- Effective from September 1, HMRC will no longer accept claims made via the telephone. It means all claims for pension tax relief must be submitted using HMRC’s online service or by letter; and
- All claimants must provide evidence in order to substantiate their claim.
Notably, before September 1, 2025, only the claimants who fulfilled the conditions outlined in HMRC’s guidelines were required to provide evidence. However, under new regulations, it has become mandatory after September 1 that all claims be made online or by letter and include supporting evidence.
What Is the Objective of Introducing New Regulations for Claiming Pension Tax Relief?
Primarily, HMRC is putting in a determined effort to modernise its systems and urge the taxpayers to submit all claims and file tax returns online. For instance, by revoking the option of claiming via telephone, HMRC now ensures that the taxpayers either use its online services or submit the claims by post. Apart from that, the other important change mandates taxpayers to include the supporting evidence for every application they submit. It gives clarity to HMRC regarding the credibility and authenticity of the claims made. Thus, the new rules are intended to streamline the process, enhance accuracy, and ensure accountability in claims for tax relief.
It might be relevant to mention that pension tax relief means that the government “tops up” an individual’s pension fund by refunding the income tax they paid on contributions.
What Is The Evidence Required For All New PAYE Claims For Pension Tax Relief?
The evidence required by HMRC for tax relief claims must be a letter or statement from the pension provider or a payslip from the employer showing:
- The claimant’s full name
- Details of pension contributions paid
- The tax year to which the pension contributions relate
- If the claim relates to a workplace pension, the letter or statement must also show that the claimant received 20% tax relief automatically from their employer
Furthermore, the individuals must ensure that when filing their claim, they provide the mandatory supporting evidence for each tax year for which their claim is made.
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Understanding How the New Rules Affect Self-Assessment And Non-Self-Assessment Taxpayers
HMRC’s revised rules affect the self-assessment and non-self-assessment individuals in the following ways:
Self-Assessment Taxpayers
In line with the new measures, the self-employed individuals who file self-assessment returns can make a pension tax relief claim. However, they must make this claim through their tax return.
To elaborate, unlike employees, self-employed individuals do not have an employer to automatically make tax deductions and pension contributions from their income under the PAYE system. Consequently, they need to declare their income and pay tax themselves by filing a Self Assessment tax return each year with HMRC. It shows their income, expenses, and any claims for pension-related reliefs.
Hence, as self-employed individuals’ tax relief is not handled automatically via PAYE, they claim the relief directly via their Self Assessment when they contribute to a pension scheme.
Handling self-assessment tax returns requires more than just filling forms. These guides are indispensable for every taxpayer:
Non-Self Assessment Taxpayers
On the other hand, non-self-assessment taxpayers or individuals who are not required to file a self-assessment can still file a tax relief claim on pension contributions for different reasons. To exemplify, if an individual pays income tax at a higher rate (40%) than the basic rate, they can claim an extra 20% in tax relief.
Nonetheless, the case with basic taxpayers is a bit different. If an individual is a basic rate taxpayer, they can claim the tax relief through their PAYE tax code, provided the claim is successful. For that to happen, one of the following should be met:
- They either contribute to a workplace pension scheme where the employer does not claim the tax relief, or
- They pay a lump sum into a personal or workplace pension scheme that is not under a net pay scheme.
Significantly, a limited company director can also be a non-self-assessment taxpayer, given that all of their income falls under PAYE and they do not have any other untaxed income, such as dividend payments. Therefore, if all of their income has already been taxed under the PAYE system, the directors do not need to file self-assessment tax returns or make claims for pension tax reliefs via it.
Instead, they can make personal contributions to the private pension scheme. In addition, the limited company also makes contributions to a director’s pension pot, boosting the overall savings.
What’s more, the directors can claim the tax relief on pension contributions made personally or via the limited company. The following guides provide an insight into the directors’ pension contributions and the tax relief on them:
Key consideration before Filing A Claim For Pension Tax Relief?
Before considering filing a pension tax relief claim, it is of utmost importance that individuals have thoroughly analysed their current finances and ensure they have all the necessary documents, such as pension statements and payslips.
Having the relevant information and documents helps them file the claim and secure the relief quickly.
Bottom Line
In brief, HMRC’s revised PAYE rules to claim pension tax relief underscore the fact that it is increasing its shift towards online services and stricter requirements for documentation. The introduction of new measures is not only meant to modernise the tax relief claims system, but it also provides clarity to HMRC and puts greater responsibility on taxpayers. Therefore, they must prepare and submit the correct evidence for each tax year. Hence, it is important for individuals to understand and adapt to these new rules to claim the correct pension tax relief, irrespective of whether they are filing through self-assessment or outside of it.
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