Tax reliefs going unclaimed by higher earners

A survey of 4,000 people has found that around 76 per cent of high earners do not complete a self-assessment tax return, as they believe tax is automatically deducted from their earnings or pension through PAYE.

For many this could mean that they are not claiming tax relief on pension contributions and charitable donations and are therefore paying more tax than they need to.

For higher-rate taxpayer they could be claiming claim an additional 20 per cent relief on charitable donation by filing a tax return, as charities receive basic-rate tax relief at 20 per cent on donations, resulting in an extra £25 for each £100 donated, which is reclaimable by the taxpayer.

The survey also found that 30% of those high earners contributed to a pension and could therefore be claiming tax relief on their contributions through self-assessment.

Additional research by HMRC found that 4.6 million people paid higher rate tax in the 2015/16 tax year and yet 59 per cent of those who made charitable donations did not claim tax relief during this period.

Posted in Professional News.