Unclaimed Pension Tax Relief: Check If HMRC Owes You Money

Every year, higher-rate taxpayers leave an estimated £1.3 billion in unclaimed pension tax relief sitting with HMRC. That's money they're legally entitled to — money that could be in their bank account — going uncollected simply because most people don't know it exists.

Are you one of them?

Why Does Pension Tax Relief Go Unclaimed?

The system is confusing by design. Here's how it works:

When you contribute to most workplace pensions, your pension provider automatically claims basic-rate tax relief (20%) from HMRC. This happens without you doing anything. Your £80 contribution becomes £100 in your pension pot.

But if you're a higher-rate taxpayer (earning over £50,270), you're entitled to 40% tax relief on those contributions. The extra 20%? It doesn't appear in your pension pot. It comes back to you as a cash refund — but only if you claim it.

The problem: Nobody tells you to claim. Not your employer. Not your pension provider. Not HMRC. So millions of eligible taxpayers never do.

How Much Unclaimed Relief Could You Be Owed?

The amount depends on your income and pension contributions. Higher earners with larger contributions can be owed substantial amounts.

Quick calculation: Take your annual pension contribution and multiply by 20%. That's roughly what you're owed per year (assuming you're a higher-rate taxpayer throughout).

Here's what that looks like in practice:

| Annual Salary | Contribution Rate | Annual Contribution | Unclaimed Per Year | 4 Years Backdated | |---------------|-------------------|---------------------|-------------------|-------------------| | £55,000 | 5% | £2,750 | £550 | £2,200 | | £65,000 | 5% | £3,250 | £650 | £2,600 | | £75,000 | 6% | £4,500 | £900 | £3,600 | | £85,000 | 7% | £5,950 | £1,190 | £4,760 | | £100,000 | 8% | £8,000 | £1,600 | £6,400 |

The average PensionReclaim customer discovers they're owed between £2,000 and £4,000.

Who Has Unclaimed Pension Tax Relief?

You likely have unclaimed relief if you meet these criteria:

1. You earn over £50,270 per year This puts you in the higher-rate tax bracket (40% tax on income above this threshold). In 2024/25, approximately 5.5 million UK taxpayers fall into this bracket.

2. You pay into a "Relief at Source" workplace pension This includes most auto-enrolment schemes: NEST, The People's Pension, NOW: Pensions, Scottish Widows workplace schemes, and many others. These schemes deduct contributions from your pay after tax is calculated.

3. You don't already claim through Self Assessment If you complete a Self Assessment tax return and include your pension contributions, you may already be claiming. But many higher-rate taxpayers who file Self Assessment forget to include pension contributions — or don't file Self Assessment at all.

Rough estimate: Of the 5.5 million higher-rate taxpayers in the UK, around 3-4 million have unclaimed pension tax relief. Most don't know.

Why HMRC Doesn't Automatically Refund You

You might wonder: if HMRC knows I'm a higher-rate taxpayer, and they know my pension contributions (since my provider claims basic relief), why don't they just send me the extra money?

The honest answer: it's not how the system works.

HMRC operates on a "claim" basis for this relief. They hold the money until you ask for it. This means:

• They won't contact you to say you're owed money
• They won't automatically adjust your tax code
• They won't add it to any refund you're already due

The onus is entirely on you to claim. If you don't, the money stays with HMRC indefinitely (until the 4-year statutory deadline passes, at which point it becomes theirs permanently).

Is this fair? Arguably not. Is this how it is? Yes.

How to Check If You Have Unclaimed Relief

Here's a quick self-assessment:

Step 1: Check your tax bracket Did you earn over £50,270 in any of the past 4 tax years? If yes, continue.

Step 2: Check your pension scheme type Look at a recent payslip. Find your pension deduction and your taxable pay. If your pension contribution is deducted after tax is calculated (meaning your taxable pay doesn't reduce by the contribution amount), you're in a Relief at Source scheme.

Alternatively, check if your scheme is one of these common RAS providers:

• NEST
• The People's Pension
• NOW: Pensions
• Smart Pension
• Most employer schemes through Scottish Widows, Legal & General, Aviva

Step 3: Check if you've already claimed Have you filed a Self Assessment tax return and included your pension contributions under "tax reliefs"? If not, you haven't claimed.

If you answered "yes" to Step 1, "Relief at Source" to Step 2, and "no" to Step 3 — you have unclaimed pension tax relief.

The 4-Year Deadline: Don't Let Your Money Expire

HMRC allows claims for the current tax year plus the four previous tax years. After that, the money is forfeited.

As of January 2025:

• 2020/21 relief expires April 2025 (months away)
• 2021/22 relief expires April 2026
• 2022/23 relief expires April 2027
• 2023/24 relief expires April 2028

If you were a higher-rate taxpayer in 2020/21 and haven't claimed, you're about to lose that year's relief permanently. There's no extension, no appeals process, no exceptions for "I didn't know."

How to Claim Your Unclaimed Relief

There are three routes:

Option 1: Self Assessment

If you file a Self Assessment tax return, you can include pension contributions in the "tax reliefs" section. This works for the current year and you can amend previous years' returns if within the deadline.

Best for: People already in Self Assessment who forgot to include pension contributions

Option 2: Write to HMRC

You can write to HMRC's Pay As You Earn department explaining your situation. Your letter should include:

• Your National Insurance number
• Each tax year you're claiming
• Your salary for each year
• Your pension contribution for each year
• Your pension scheme name
• Your contact details

HMRC will process the claim and either send a refund or adjust your tax code.

Best for: People comfortable doing paperwork themselves

Option 3: Use a Claim Service

Services like PensionReclaim guide you through the process and generate ready-to-sign claim letters based on your specific situation.

Best for: People who want the calculations and paperwork handled

What Happens When You Claim?

Once HMRC receives your claim, they typically take 6-12 weeks to process it. The outcome is usually one of:

Cash refund: HMRC sends a cheque or bank transfer for the full amount owed across all claimed years.

Tax code adjustment: For smaller amounts, HMRC may adjust your tax code so you pay less tax over the coming year, effectively receiving the refund through higher take-home pay.

Partial refund + adjustment: Some of the money as immediate refund, the rest through tax code changes.

You'll receive a letter explaining what they've done and the amounts involved.

Real Examples of Unclaimed Relief

Case 1: The "I Had No Idea" Discovery Sarah, marketing manager, £62,000 salary, 5% pension contribution. Never filed Self Assessment, never claimed relief. Discovered she was owed £2,480 covering four years. Received cheque from HMRC within 8 weeks.

Case 2: The Job Changer James, IT consultant, started at £48,000 (not eligible), promoted to £58,000 in 2022. Two years of unclaimed relief at 5% contribution = £1,160. Younger claim, processed in 6 weeks.

Case 3: The High Contributor David, finance director, £95,000 salary, 10% contribution through employer scheme. Four years unclaimed = £7,600. Largest single year was £1,900. Received bank transfer after 10 weeks.

Frequently Asked Questions

Is this legitimate? It sounds too good to be true. Completely legitimate. Higher-rate pension tax relief is established under Section 192 of the Finance Act 2004. HMRC's own guidance confirms it. The only reason it feels "too good to be true" is that so few people know about it.

Why doesn't my employer sort this out? Your employer runs payroll, not your personal tax affairs. They don't know your total income (you might have a spouse, investments, or other income sources). And frankly, it's not their responsibility — it's between you and HMRC.

What if I changed jobs during the period? You can still claim for all eligible years. You'll just need contribution information from each employer's pension scheme separately.

I'm not sure if I qualify. What should I do? The quickest way is to use our free calculator. Enter your details and get an instant estimate. No commitment, no email required.

What if I earn over £100,000? You may be entitled to even more relief due to the personal allowance taper. The calculations get more complex, but the principle is the same — and the amounts can be larger.

The Bottom Line

If you earn over £50,270 and pay into a workplace pension, there's a strong chance HMRC is holding money that belongs to you.

This isn't a tax "trick" or grey area. It's a straightforward relief that millions of people don't claim because nobody tells them it exists.

The average unclaimed amount is £2,000-4,000. Some claims exceed £6,000. And with the 4-year deadline constantly rolling forward, waiting means losing money permanently.

Check if you're owed in under 2 minutes with our free calculator.

Your money is sitting with HMRC. It's time to get it back.