How do I know if I’m eligible for tax relief?
At the moment, you’re generally eligible for tax relief if you’re under the age of 75 and meet one of the following requirements:
- you are resident in the UK
- you pay UK income tax
- you have paid UK income tax during any one of the five tax years before the current one
If you get tax relief, the government will pay some of your contributions for you so you need to pay less.
We’ll claim the basic rate of tax relief on your behalf. We can usually only do this if we have your National Insurance number. It’s important to make sure you’ve given this information to us so you don’t miss out on any extra money.
You can get more information on tax relief the HMRC website (opens in a new window).
How does NEST claim tax relief?
NEST uses the ‘relief at source’ method of claiming tax relief. This means that you make contributions from your pay after the deduction of tax− if you pay tax. If you are eligible for tax relief, NEST will claim this for you from HMRC and add it to your pot.
If I don’t get tax relief do I still get the full minimum contribution?
Yes, you’ll still get the minimum amount even if you’re not eligible for tax relief. This will be made up of contributions from you and your employer.
The total minimum contribution is currently 2 per cent of your qualifying earnings. Of this, your employer must pay at least 1 per cent. If you’re not eligible for tax relief, then the rest is made up by you.
It’s worth remembering that your employer could contribute more than the minimum if they want to, so you might not have to pay the full 1 per cent yourself.
Find out more about minimum contributions
What difference will tax relief make to my contributions?
If you’re eligible, NEST will claim tax relief on your behalf and add it to your pot.
The basic rate of tax relief is 20 per cent. So if your minimum contribution is £100, you’ll pay in £80 and you’ll also get another £20 in the form of tax relief. In total £100 will go into your pot on top of any contributions from your employer.
If you pay a higher rate of tax on some of your earnings, you may be able to get more tax relief on your contributions. You’ll need to claim this yourself by completing a Self Assessment tax return and sending it to HMRC. You can find this on the HMRC website (opens in a new window).
If you’re not eligible for tax relief, you’ll have to make up your whole minimum contribution yourself. In the example above, you’d pay the full £100, unless your employer chooses to top up your contribution by paying extra for you.
Bear in mind that NEST currently has an annual contribution limit for what can go into your pot each year. Tax relief counts towards this limit as well as the contributions paid by you and your employer. See how much can go into your pot.
What should I do if my eligibility for tax relief changes?
When you first join NEST, we’ll send you a welcome letter telling you whether we believe you’re eligible for tax relief or not. This is based on information from your employer or if you’re self-employed, the information you gave us.
If this information is correct you don’t need to do anything.
However, if you think the information in the letter is wrong, you need to let NEST know within 30 days.
During your time saving with NEST, if you think your eligibility for tax relief has changed at any point, you need to let us know. You also need to let your current employer know if they are contributing to NEST.
Your eligibility could change due to an event, for example, having not paid UK tax for more than five years, which would mean you’re no longer eligible.
If your eligibility changes, then you need to let us know by the later of these two dates:
- 30 days after your eligibility has changed
- by 5th April of the tax year in which the event occurs
It’s easy to let us know by logging in online and following the steps on screen. If you prefer, you can let us know in writing.
Where can I get the most up-to-date information on tax relief?
We’ve taken care to make sure this FAQ is complete and up to date, but NEST is not responsible for any loss incurred as a result of using this information. If you have any doubts about your eligibility for tax relief, you should contact HMRC or visit their website (opens in a new window).