A report in Pensions Age revealed that over 800,000 high earners are not claiming the pension tax relief to which they are entitled.
Furthermore, the report confirmed that the total amount of unclaimed relief could be a remarkable £1.4 billion, averaging about £2,000 per individual.
As a professional rugby player, it is important to make the most of your earnings during your career to secure your long-term wealth. Building a pension fund is a key part of that process.
Read about how pension tax relief works and why you need to claim everything you are entitled to.
Basic-rate tax relief is automatically added to your contributions
The amount of tax relief you are entitled to is determined by your marginal rate of Income Tax, and you are eligible for relief on pension contributions up to 100% of your earnings. However, you will trigger an additional tax charge if your contributions exceed the Annual Allowance, which is currently £60,000.
This charge effectively recoups the tax relief you receive on contributions above the Annual Allowance.
It is also important to note that your Annual Allowance reduces by £1 for every £2 by which your adjusted income exceeds £260,000, with a minimum allowance of £10,000.
The 20% basic-rate relief is automatically applied to qualifying pension contributions. This means that if you contribute £80, the government will top this up to £100.
That is an automatic 25% uplift without you having to claim anything.
If you are a higher- or additional-rate taxpayer, you are entitled to extra relief to bring the amount in line with your marginal Income Tax rate of 40% or 45%. However, you must claim the additional relief through your Self Assessment tax return each year. The amount due to you will either be paid directly to you or be made as an adjustment to your tax code.
As the research from Pensions Age shows, many taxpayers are not claiming all the relief they are entitled to.
Tax relief on your pension contributions is a legitimate benefit, and you should ensure that you are claiming your full entitlement.
A worked example can help you see the value of claiming tax relief
If you have earnings of £100,000, you can claim tax relief of 40% as a higher-rate taxpayer.
- If you make a personal contribution of £16,000, an additional £4,000 is automatically added, bringing the total to £20,000.
- You can then claim an additional £4,000 relief through your Self Assessment tax return.
- This means that the £20,000 that has gone into your pension has effectively only cost you £12,000.
If your earnings exceed £100,000, making a pension contribution can also provide you with an additional benefit related to your wider Income Tax position.
Your Personal Allowance (the amount of income you earn each year without paying tax) tapers away between £100,000 and £125,140. However, your contribution will reduce your net relevant earnings and could therefore mitigate the effect of the taper.
You can claim higher rates of relief from the previous four tax years
If you have not claimed higher rates of tax relief on your pension contributions from previous tax years, it is not too late to do so.
You can claim higher- and additional-rate tax relief on contributions for up to four tax years from the end of the tax year in which the contributions were made. This means that in the 2026/27 tax year, you can claim relief for tax years back to 2023/24.
You can do this either by amending the relevant previous Self Assessment tax returns or by contacting HMRC directly.
Why claiming tax relief is important for rugby players
As a professional sportsperson, you have a limited playing career, during which you will want to maximise your earnings and put yourself on a secure long-term financial footing.
Your income could include earnings from a variety of sources, such as sponsorship, media work, and coaching, in addition to your club salary and bonuses.
Because of that, your tax arrangements may be more complicated than you may have realised, and you might have overlooked some valuable reliefs.
As a result, it may be worth reviewing your previous pension contributions to ensure you are not one of the thousands of people missing out on valuable tax relief.
If you are, we can help you take steps to claim the tax relief you are entitled to.
Get in touch
We always recommend seeking expert advice for your retirement and tax planning.
If you would like to talk to us about your own arrangements, please get in touch.
Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.