HMRC provide advice on self-employed tax returns
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Many of these freelancers pay into a pension scheme each month to plan for the future. But not everyone knows they may be entitled to money back.
Tips to save money and add to the pension pot can go a long way and heavily contribute to that comfortable retirement many look forward to.
So, it’s important to know if you’re eligible for these tax returns at all, and how to claim them.
Pete Hykin, co-founder of Pensions Challenger said: “Tip one – those who pay tax at a higher rate than 20 percent (basic tax rate), may claim additional relief when you when they do the self-assessment tax return.
“For example, if you pay 40 percent tax, you can claim tax relief income taxed at a higher rate when declaring pension contributions.”
Those who pay tax at a higher rate than 20 percent may claim additional relief (Image: GETTY)
Another way to claim is if a person has children that are eligible Child Benefit with a household income.
He continued: “Tip two – those who have children eligible for Child Benefit with a household income greater than £50,000 (before taxes) may claim back tax paid on child benefit.
“When you pay into your pension, you get a bonus from the government added to it.
“People then may be able to claim up to 100 percent of your tax back on Child Benefit.
“This depends on your household income and your pension contribution levels.”
Mr Hykin then went on to explain the last tip.
He continued: “Tip three – business owners can offset employee pension contributions against your limited company’s corporation tax bill.
“Employer pension contributions come out of your company’s revenue, essentially as a business expense.
It’s important to know if you’re eligible for these tax returns at all, and how to claim them (Image: GETTY)
“You only pay corporation tax on your company profits.
Now, you won’t get the same top up from the government that an individual would, but you do save 19 percent if you aren’t liable for that corporation tax.”
Being a self-employed worker, when a person add money into a pension pot the government may add 25 percent bonus to everything individuals save.
That is guaranteed cashback on what people save added directly to a pension.
Tax treatment does depend on your individual circumstances.
This may be subject to change in the future
If people have pension pots from previous jobs, they should be able to transfer their old pension pots to the recent one they contribute to.
With the details of an old pension, Britons can transfer the rest from their dashboard and a team of experts will sort out the rest.