From September, more UK taxpayers claiming pension tax relief will be asked to provide supporting documentation, following a review that identified widespread inaccuracies. The move forms part of a wider clampdown by HMRC, now bolstered by additional government funding to improve tax compliance.
The threshold at which HMRC requests proof for pension relief claims is being lowered, a decision which will predominantly affect higher-rate taxpayers using self-assessment. The change is designed to ensure accuracy in claims and safeguard public funds, according to the tax authority.
Claiming Tax Relief to Get More Stringent
HMRC will no longer accept pension relief claims by telephone, and all claims made from 1 September 2025 will need to be submitted either online or via post. The change is aimed at preventing errors identified in a recent internal review.
According to the Financial Times, HMRC found that “many claims below the current evidence threshold were incorrect”, citing issues such as misreporting of taxpayer status or misunderstanding of the pension scheme type. The new approach lowers the evidence threshold, meaning more taxpayers will be asked to supply proof when claiming tax relief on their personal pension contributions.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, raised concerns that this could affect accessibility: Not allowing people to claim by phone would “present an issue for people who don’t have online access and doing it by letter may well be quite a lengthy process.”
Tax relief is applied differently depending on the pension scheme. In workplace “net pay” arrangements, tax relief is applied automatically through payroll. For personal pensions, basic-rate relief of 20% is added by the provider, while higher- and additional-rate taxpayers must claim the remainder via self-assessment. The rules stipulate that relief cannot exceed 100% of annual earnings.
New Compliance Drive Under Labour’s Tax Strategy
This adjustment comes amid a broader drive by the Labour government to strengthen HMRC’s enforcement capabilities. According to the Financial Times, the government is allocating an extra £555 million per year to HMRC with the aim of raising £5 billion in additional revenue annually.
The pension relief changes are part of this strategy, aimed at tightening oversight and addressing inaccuracies in taxpayer claims. By lowering the threshold for required evidence, HMRC aims to close existing gaps in compliance and minimise erroneous or inflated claims.
The move signals an intensified focus on tax compliance under the Labour government, placing greater onus on individuals to ensure their pension claims are both accurate and properly substantiated. While positioned as a safeguard for public funds, the policy introduces a more demanding process for those navigating the self-assessment system.
