Tax credits and company pension payments from net pay

Hi
I am having some fun with tax credits at the moment as they will not accept my pension payments and deduct this from my gross pay as it's a company pension scheme. I paid through my employer into my pension in 2 ways. One method tax credits accept, the other they don't.
I will give you an example.
I paid some pay into my pension via the salary sacrifice method and this was taken off my gross pay before tax/ni. All good and accepted by tax credits as they use the p60 gross figure.
I then in the same year paid into my pension using the company's other method. This was taken out of my net pay after tax/ni. So, this way my pension contributions are not deducted from gross pay so show in my p60. Tax credits say I can't claim this as it's a company pension scheme.
I understand that many company pension schemes are taken from gross pay so you don't need to deduct it again. However, in my case the second method is from net pay.
I found this in the wtc2 hmrc document
---
However, contributions to any HMRC registered pension scheme (such as a personal pension plan or retirement annuity) and payments under the Gift Aid scheme should be deducted when you work out your income for a
tax credits claim. If you made personal pension or retirement annuity contributions, Gift Aid payments or a trading loss, please see TC825 ‘Working sheet for tax credits relief for Gift Aid donations, pension contributions and trading losses’.

You should not normally deduct any contributions to an occupational pension scheme or payments under a payroll giving or Give As You Earn (GAYE) scheme. This is because your employer will have already deducted these payments from your gross pay.
---

In my case the pension payment they are not accepting were taken from net pay, so should be ok to deduct. For income tax purposes they accept this pension payment so it's just tax credits that has the issue. I have spent 6 months waiting for the appeal decision and they said the same thing again. I asked for evidence of this decision as I wish to take it further but am struggling to get anything out of them...surprise surprise.

Does anyone else pay into a company pension scheme but pay from net pay ? Has anyone managed to get tax credits to accept this?
Please help
Gary

Comments

  • Icequeen99
    Icequeen99 Posts: 3,775 Forumite
    It doesn't surprise me that tax credits have taken this approach, their staff seem to struggle to understand this.

    It is very clear in the legislation that you can deduct pension payments (into registered schemes) from gross pay.

    You need to allow the appeal to progress. If the appeals team don't see the mistake made by the earlier staff, then the appeal will continue to Tribunal. It should be an easy case for you to win.

    A waste of everyone's time though.

    IQ
  • Thanks
    I rang them today as I am still waiting for the official reply to the decision...They are reviewing the decision apparently ..but there doesn't seem a time limit for this!
    I don't expect a quick answer and I suspect I will be going to tribunal. I had to do this regarding my disabled son recently and won. They said then it should never have gone to court. What a waste of time and money. All the professionals/ independent advice has told me that they are wrong but I guess it will go to court.
    I would be interested to know if others have had this and won with tax credits
    Gary
  • zagfles
    zagfles Posts: 20,277
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Forumite
    It's been discussed here before, and people have got tax credits to accept it though with great difficulty. See http://forums.moneysavingexpert.com/showthread.php?t=4632603

    Have you sent them evidence which proves that your pension conts are being taken from net pay? Something like two consecutive payslips and the annual statement from the pension scheme showing they claimed basic rate relief should do.
  • Well, I have had some very good news.
    :j
    They paid me the tax credits I was due today…finally 7 months later.


    After being told that I was not eligible to reduce my gross pay by my company pension payments made (paid from net pay) and then told the same after a mandatory reconsideration, I asked for the award criteria that was used to make this decision as I had no evidence in any letters apart from "it's a company pension scheme so not eligible".


    Tax credits then reviewed it again and found there was no evidence to support the original decisions!


    I received a letter to say it was being paid.


    I had a scare as it was stopped again and I received another letter saying it was not going to be paid but no reason provided the next day!


    I had to speak to another department to get it OK’d again. I did think I was going to have to go to court but they accepted it....finally!


    A lot of calling them every week to get this sorted but it was worth it in the end!


    At least if anyone else has this issue in the future, you know that you are entitled to reducing you gross pay when pension payments are made from net pay.
    Just remember to use the pension payment gross pay figure as you pension provider will claim the 20% tax paid on it!
    Gary
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 342.5K Banking & Borrowing
  • 249.9K Reduce Debt & Boost Income
  • 449.4K Spending & Discounts
  • 234.6K Work, Benefits & Business
  • 607.1K Mortgages, Homes & Bills
  • 172.8K Life & Family
  • 247.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards