Higher-rate tax payer, contributions through payslip

JayZed

I am a higher-rate tax-payer and have always paid my pension contributions through my payslip. I had always assumed that I'm only getting 20% tax relief on this and that I need to claim the additional 20% through my tax return or by calling the tax office.

However, on searching these threads I came across this comment from a regular poster who knows a lot about pensions (from a 2006 thread): "When you pay via your payslip, the pension is taken off the gross income before tax is paid on it. Therefore the contribution gets tax relief at the point. "

So does this mean that I don't actually need to claim higher-rate tax relief, I'm getting it already?

CLAPTON

if you are contributing to an occupational pension then you automatically get 40% tax relief ... if its simply a personal pension then its only at 20%

look on your payslip
if its an occupational pension is usually say somethign like
Gross pay
pension payment
Taxable pay

if taxable pay is less than Gross pay by the pension amount then you are getting 40% relief already

JayZed

Ah, I see, so as it's a personal pension I do still need to reclaim the tax. That's what I'd always understood.

Okay, next question: I don't file a tax return, and don't really want to, as I have no income outside PAYE (my investments are all in tax wrappers). Can I reclaim the tax for this and the past couple of years just by calling/writing to my tax office?

jem16

JayZed wrote: »

Can I reclaim the tax for this and the past couple of years just by calling/writing to my tax office?

Yes you can. They can adjust your tax code for next year to take into account the pension payments and/or organise a refund.

jamesd

Ask your payroll department. It's possible that you have a salary sacrifice or smart pension option that is paying gross with no need to reclaim tax.

simonleblank

CLAPTON wrote: »

if you are contributing to an occupational pension then you automatically get 40% tax relief ... if its simply a personal pension then its only at 20%

look on your payslip
if its an occupational pension is usually say somethign like
Gross pay
pension payment
Taxable pay

if taxable pay is less than Gross pay by the pension amount then you are getting 40% relief already

I have been told by the company I work for that I will have to claim back the additional 20% and that this was normal?

CLAPTON

simonleblank wrote: »

I have been told by the company I work for that I will have to claim back the additional 20% and that this was normal?

what are your circumstances

are your pension payment paid before tax into an occupational pension scheme or what?

jamesd

simonleblank wrote: »

I have been told by the company I work for that I will have to claim back the additional 20% and that this was normal?

That's one of the ways it can be done. This one is for when you have a stakeholder or personal pension and the company is deducting monthly payments to it from after tax income. The basic rate tax is then reclaimed by the pension company and paid into the pension plan, while you reclaim the higher rate part.