Relief at source operates by allowing an individual to make his relievable pension contribution after deducting a sum equal to the basic rate of tax. The scheme administrator then reclaims the sum deducted from HMRC (FA 2004, s. 192(1)–(3)). If the member is a higher-rate taxpayer (or, from 6 April 2010, also an additional-rate taxpayer), the difference between basic-rate relief given at source and higher or additional-rate relief due is claimed in the individual’s self-assessment return. The higher or additional-rate relief is given by extending the member’s basic rate and higher-rate bands by the amount of the contributions (FA 2004, s. 192(4)).

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