High rate taxpayer & pensions

imaginey

Had a quick search on "high rate tax" in the forum without much luck.... Anyway, I have a company stakeholder pension, and on a statement I received recently it mentioned something about only getting tax relief on the basic rate as standard and if you were a high rate taxpayer then you'd need to do something (unspecified, naturally) about it yourself. My salary appears to put me in the high tax band, and has for a couple of years now.

Checking online, it appears I need to get hold of, and fill out form PP120. I rang my tax office to ask for it, and they claimed it doesn't exist anymore (despite it being all over the HMRC website as the thing you need to fill out - and still is), and the person I spoke to said I just need to put it in writing, but was vague at best regarding what I needed to include in the letter. Emails to company HR/finance, and to the company apparently in charge of administering our pensions have yielded !!!!!! all useful information, so I don't know what to do.

The questions I have are:

1. If form PP120 doesn't exist, exactly what information do I need to put in a letter to the tax office? The reason I've not sent anything yet is because I don't want to get in a backwards/forwards loop of not supplying the correct/relevant information.

2. I also get a car allowance (which gets paid each month alongside my salary). Should I be adding this to my salary to work out which tax band I lie in? If so, then I've been in the high tax band for 4 years. I know you can claim back retrospectively, but how far?

thanks for any help/advice,

Ste.

dunstonh

1. If form PP120 doesn't exist, exactly what information do I need to put in a letter to the tax office? The reason I've not sent anything yet is because I don't want to get in a backwards/forwards loop of not supplying the correct/relevant information.

If its deducted from your payslip, you do nothing if basic rate taxpayer as its already taken into account. Higher rate taxpayers can claim the difference via their tax return or tell the tax office who will make a amendment to the tax code to take the contributions into account (if fixed amounts)

2. I also get a car allowance (which gets paid each month alongside my salary). Should I be adding this to my salary to work out which tax band I lie in? If so, then I've been in the high tax band for 4 years. I know you can claim back retrospectively, but how far?

Car allowance would be taxable income but you must remember to take your annual business mileage allowance into account.

imaginey

dunstonh wrote:

If its deducted from your payslip, you do nothing. Its taken care of already.

My pension? Yes, it is deducted automatically, however my issue is not taken care of automatically. As I said, tax relief is only given at the basic rate unless I specifically take the steps to ensure otherwise (as I read it, and have been told). A workmate in a similar situation has just recieved a £2000 tax rebate over this, however he was able to fill in a PP120 and get info from the pension administrators to help.

If its a direct debit, you normally complete the pensions section on the annual tax return.

I've never had to do an annual tax return, hence the PP120 (or equivalent) route I'm trying to take.

Alternatively, you write to let the tax office know the annual gross contribution.

Annual gross contribution of what? This is the sort of info I suppose I need to put in a letter, but without knowing what to put in I can't. I may well have all the relevant info, but I don't know what's likely to be required.

thanks,

Ste.

imaginey

dunstonh wrote:

If its deducted from your payslip, you do nothing. Its taken care of already.

This mentions what I'm on about, in the likely event I worded it badly!

http://www.atsipp.co.uk/sipps.asp?pageID=2.3

mbamick

Hi Imaginey,

I'm in exactly the same position as you, insofar that I have a regular pension income as well as a full time job. The annoying thing is that the pension is dealt with by one Tax Office, and my work-related income comes under a different Tax Office [crazy system if you ask me].

Because my pension income exceeds the annual Tax Allowance, I wrote to the tax Office dealing with my wage income, giving them details of my second income [pension]. They simply adjusted my PAYE Tax code, so that I now pay more income tax from my wages.

Speak to your wages or HR dept if you are uncertain about which Tax Office to write to.

Nick_C_4

If its deducted from your payslip, you do nothing. Its taken care of already.

I don't think that's right, although I'm open to correction. My understanding is that contributions to an occupational pension are taken care of in your payslip - as they take off the contributions before calculating tax. But for a group personal pension, the contributions are taken off after tax. They will then receive basic rate tax relief only.

The way to get your higher-rate tax relief is either to wait until the end of the tax year, and fill in a tax return. Or, phone your tax office (it can be done over the phone, and I've always found them helpful) and tell them you want your tax code re-assessed. Tell them the reason is you're a higher-rate taxpayer and what your expected pension contributions for the tax year are, and they will adjust your tax code accordingly. Anything you've overpaid this year so far will be refunded in your next payslip, and you'll be taxed correctly from then on.

isasmurf

Nick_C wrote:

I don't think that's right, although I'm open to correction. My understanding is that contributions to an occupational pension are taken care of in your payslip - as they take off the contributions before calculating tax. But for a group personal pension, the contributions are taken off after tax. They will then receive basic rate tax relief only.

You understand correctly.

Apparently HMRC are withdrawing form PP120 and will adjust your tax code based on your previous years contributions. http://www.hargreaveslansdown.co.uk/news/expert_views/index.asp?code=2278

bootman

Just call the pensions company and ask for a certificate of contrabutions made. Then send a letter to the tax office along with your p60 and p11D from your company if you get one asking for your tax to be calculated for you, state on the letter what your gross pension contribution was for the year.
I think that is the easiest way to do it.