HMRC is bringing in tougher checks for higher rate pension relief claims

HMRC is bringing in tougher checks for higher rate pension relief claims

HMRC have stated that a third of claims for personal pension relief by higher rate taxpayers are incorrect with numerous ineligible claims, mistaken calculations and some not even knowing how much they paid into their pensions!

Therefore, HMRC have announced that it is tightening up checks to ensure personal pension relief claims are legitimate after a spot check found ‘many claims below the current evidence threshold were incorrect.’ In future, all claimants will have to provide evidence of their claims.

It will also no longer be possible to make a claim over the phone.

With effect from 1 September 2025, HMRC will lower the threshold for requiring evidence in support of new requests for higher rate or additional rate relief claims to be given through an individual’s tax code for the current year.

HMRC have said that around 80,000 personal pension relief claims are received annually, and the total cost of pension tax relief was £29.5bn in the 2024-25 tax year.

The issue, which came to light after HMRC conducted a review to understand the level of risk in the sub £10,000 personal pension relief claims and have said that most taxpayers they wrote to did not respond with evidence, while of those who did, around one third needed to correct the amount claimed.

Due to the extent of the problem, HMRC will no longer accept claims over the phone and going forward, individuals will have to submit claims online or by letter only.

A HMRC spokesperson said: ‘We’re lowering the threshold to ensure that people claim the right amount of relief and protect taxpayers’ money. This comes after we conducted a review which revealed that many claims below the current evidence threshold were incorrect.’

‘Customers can quickly and easily make a claim, and provide supporting evidence, using our online form.’

Currently taxpayers need to upload or send proof from their pension provider of payments made for each tax year they are claiming for, where any of the following apply:

• payments are more than £10,001;
•  a lump sum was paid into the pension.
• or if a basic rate taxpayer and no tax relief has been claimed at source.