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  • FIRST POST
    • richay
    • By richay 13th Jul 17, 12:57 PM
    • 7Posts
    • 0Thanks
    richay
    Tax Allowance & Pension Contribution?
    • #1
    • 13th Jul 17, 12:57 PM
    Tax Allowance & Pension Contribution? 13th Jul 17 at 12:57 PM
    For a few years ive been earning less than personal tax allowance BUT I contribute a considerable amount to works pension monthly. Because i dont pay tax (because of the allowance), friend says cant get any £ back from tax office for my contributions!. Is this sad but true?
Page 1
    • Caz3121
    • By Caz3121 13th Jul 17, 1:34 PM
    • 10,846 Posts
    • 7,075 Thanks
    Caz3121
    • #2
    • 13th Jul 17, 1:34 PM
    • #2
    • 13th Jul 17, 1:34 PM
    It depends on the type of pension
    If you use google there are a number of articles such as this one
    http://www.thisismoney.co.uk/money/pensions/article-3990296/I-don-t-pay-tax-pension-tax-relief-Steve-Webb-replies.html
    • xylophone
    • By xylophone 13th Jul 17, 8:42 PM
    • 23,412 Posts
    • 13,608 Thanks
    xylophone
    • #3
    • 13th Jul 17, 8:42 PM
    • #3
    • 13th Jul 17, 8:42 PM
    Is your pension contribution taken on a net pay or relief at source basis?

    If relief at source, you will be receiving tax relief even though you do not pay tax.

    If net pay, then you won't.

    See https://www.nowpensions.com/help-centre/faqs/general-information/whats-the-difference-between-net-pay-and-relief-at-source

    http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0491
    • Dazed and confused
    • By Dazed and confused 13th Jul 17, 9:45 PM
    • 1,858 Posts
    • 827 Thanks
    Dazed and confused
    • #4
    • 13th Jul 17, 9:45 PM
    • #4
    • 13th Jul 17, 9:45 PM
    It is actually possible you are getting tax relief even with a net pay scheme. For example if salary this year was £12500 and no pension paid the PAYE tax due on the emergency tax code would be £200.

    But if you paid 10% pension your taxable salary would be £11,250 and no tax would be paid. So a tax saving of £200.
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