The end of the tax year is approaching, that means it's an ideal time to review your retirement savings and potentially reduce your tax bill by paying into a pension.

It won't take long to read this, but it could help you keep significantly more of what you earn. The government is concerned that people aren't saving enough for their future, so they offer tax relief for those who plan ahead.

Private savers get pension tax relief

The government literally gives you free money if you save into a pension. How does this work?

• Basic rate taxpayers: For every £1,000 you put in, the government will add £250. We'll claim your additional 25% for you.
• Higher rate taxpayers: Not only get the same top-up from the government, but can also claim a further 25% back in their tax return.

Tax relief on pension contributions is one of the main advantages of pensions when it comes to saving for the future. Learn more about pension tax relief.

Self-employed savers can make tax free pension contributions

Each tax year, self-employed savers can contribute up to £40,000, or 100% of their total annual income, into your pension to claim the 25% tax bonus. This applies across all of your pensions, not each pot separately.

If you exceed your annual pension allowance, you’ll be liable for an ‘annual allowance charge’. This is essentially a tax charge owed on any amount over the contribution limit.

Find our more about how much can self employed savers pay into a pension.

Limited company directors can reduce their corporation tax

Limited company owners can benefit by cutting the amount of profit that is taxed at the 19% corporation rate.

• Pensions contributions paid from your company are treated as a business expense.
• Revenue - expenses = profit.
• Profit is taxed. Currently at 19%.
• Therefore directors can save 19% on their corporate tax bill by putting some of that revenue in a pension.

Contributions must be paid before the end of the company’s financial year in order to count. Find out how much can a company can contribute to a director's pension.

Why pay into a pension before tax year end

• Private savers can get a 25% top up from the government that we arrange for you.
• Higher rate tax payers can claim even more back in their tax return - but you need to make that payment before the end of the tax year!
• Limited company owners can use pension contributions to reduce their profit, and therefore, their corporation tax. 31st March is the end of the financial year for a lot of companies, so it makes sense to pay in now before you close your books.

Finally it's worth bearing in mind that the governments next budget will be announced on 15th March 2023, and who knows what changes that will bring for everyone.