Are you one of the one million missing out on pension tax relief?

One million of Britain’s 40pc taxpayers are needlessly missing out on £810m in unclaimed relief on their pensions every year.

Eight in 10 higher-rate taxpayers who are eligible to claim relief via tax returns fail to do so, inadvertently leaving tens of millions of pounds to the Treasury, a Freedom of Information request seen by Telegraph Money has shown. 

Meanwhile, more than half of all additional- or top-rate taxpayers, those earning more than £150,000, did not claim the money they were due.

Just 310,000 of 1.4 million of the higher- and additional-rate taxpayers claimed relief on their personal pensions in 2018-19, calculations by the online pension provider PensionBee, which requested the FoI, have found.

The figures do not include people who claim over the phone or online or anyone who has received tax relief by making a “salary sacrifice” contribution. Most workplace pensions claim all the available tax relief on your behalf. 

However, personal pensions only claim relief at 20pc. The extra 20pc or 25pc must be clawed back via a tax return. If a 40pc taxpayer contributed £8,000, they would receive basic-rate tax relief of £2,000. They would also be reimbursed an additional £2,000, but only if they file a return.

Romi Savova, of PensionBee, has urged the Government to set up a flat rate of tax relief, claiming it was “long overdue”. 

She said: “The Chancellor should scrap differential rates of tax relief, which are incredibly costly and complicated to understand, in favour of a system that truly rewards everyone for putting money away for their retirement.”

Currently, tax relief is due at your marginal rate of income tax as an incentive to lock money away until your 55th birthday.

The cost of tax relief has increased by £4.4bn in two years, rising to £41.3bn for the 2019-20 tax year. This has raised fears that the Chancellor will overhaul the policy in the Budget on Oct 27. 

Rishi Sunak has reportedly been eyeing reform since last November and it has long been considered by the Government as a source of income.