The deep freeze in income tax thresholds since 2022 has dragged hundreds of thousands of people into higher tax brackets.
The statistics, obtained by insurer NFU Mutual, show additional-rate taxpayers claimed £806m in tax relief on relief-at-source pension contributions via self-assessment in 2023-24, more than double the £365m they claimed in 2022-23.
Meanwhile, the number of 45pc taxpayers claiming the relief leapt from 94,000 to 152,000. This likely reflected the surge in additional-rate taxpayers after the top tax threshold was lowered from £150,000 in April 2023.
By comparison, the number of higher-rate (40p) taxpayers claiming the relief fell slightly from 337,000 to 317,000 between 2022-23 and 2023-24. The amount of relief claimed also dropped from £710m to £610m.
Many workplace pension schemes automatically apply the full amount of tax relief to pension contributions, including for higher and additional rate taxpayers.
However, relief-at-source schemes only automatically apply basic rate tax relief of 20pc, meaning higher earners must claim the extra 20pc or 25pc themselves via a self-assessment. This is also the case for self-employed higher earners with private pensions.
The higher rate threshold kicks in once earnings pass £50,270, and the additional rate at £125,140.
