Planning for retirement is both an art and a science. There are so many variables in tax reliefs, and in how personal choice can affect the pot; how much income you want to save, which asset classes you use for investments, and if you plan on drawdowns, to name but a few.
HMRC recently admitted that their online pension relief calculator was giving the wrong answers. In this connected age, they have quite rightly pointed towards online self-service and the wealth of information that is put online for tax payers.
For most tax payers, pension contributions of up to £40,000 per year qualify for relief, but since 2016/17, higher earners have been placed under a new regime that can reduce the relief available to £10,000. To mitigate this, any effected by the change have been able to carry forward unused allowances.
This is where the issue lay. Many thought that they had maximised their allowance, so they stopped paying into their pension.
If this information is incorrect, and those very same taxpayers are now ‘out-of-pocket’ due to this, what recourse do you have? Well, we’d suggest that you start by getting in touch with an accountant who can deal with it for you. One who likes dealing with tax.