As the 5 April tax year deadline approaches, Penfold warns that last-minute errors are quietly costing UK savers thousands.
With the tax year ending on 5 April, Penfold, a leading UK workplace pension provider, is urging savers not to leave pension contributions to the last minute. Every year, many people miss out on allowances they are entitled to, mistime contributions that fail to process or overlook relief they could have claimed.
Chris Eastwood, CEO and Co-Founder of Penfold said: “We see the same money mistakes come up time and time again at this point in the tax year. Most of them are very straightforward to avoid – and could be the thing that gets people investing more into their pension and paying less to HMCR – but only if they act before the window closes.”
Here are the five Penfold see most often:
Mistake 1: Assuming the deadline does not apply to them
Eastwood: “It’s easy to assume the tax year end deadline belongs to someone else. Businesses. High earners, maybe. The self-employed. But each tax year until you’re 75, anyone can usually get tax relief on all your pension contributions up to the amount you earn. And should do what you can to make the most of the free money before the 5 April deadline.”
Mistake 2: Leaving it too late to process
Eastwood: “Payment processing is less glamorous than tax strategy but just as important. A payment initiated on 4 April is not guaranteed to arrive on 4 April. If it lands after midnight on 5 April, that contribution ‘belongs’ to next year. Meaning you might still be eligible for tax relief, but that the payment will count towards your allowance in the next financial year.”
Mistake 3: Not carrying forward unused allowances
Eastwood: “If you haven’t used your full pension allowance in the previous three tax years, you may be able to carry forward unused allowance and make a much larger contribution this year. This only applies for the last three tax years. So, after 5th April 2026, any unused allowance from the 2022/23 tax year will expire.”
Mistake 4: Ignoring the £100,000 income trap
Eastwood: “If you’re earning over £100,000 and not using your pension strategically, there’s a strong chance you’re paying more tax than you need to. Between £100,000 and £125,140, the tax system quietly becomes very expensive. The personal allowance thins out at £1 for every £2 earned above the threshold, pushing the effective rate on that income up to 60%. A pension contribution before 5 April can reduce adjusted net income, which can pull earnings back below the taper and recover some of what would have been lost.”
Mistake 5: Forgetting non-earning household members
Eastwood: “Pension tax relief is not exclusively for people in employment. A non-working spouse, a partner on a low income, even a child, can each receive contributions of up to £2,880 a year, which HMRC rounds up to £3,600. Most families have never been told this is an option.”
“The relief is there, the allowances are generous, and for most people a small amount of time spent reviewing their position before 5 April can make a real difference to their retirement savings. It is just a case of knowing where to look and acting before the window closes,” concludes Eastwood.