Tax code & pension

Tabatha_Kitten

Can anyone tell me if this is correct please.

I have received a PAYE coding notice to say that my tax code is changing from 647l to 709l because I have advised them that i contribute 616 towards a pension annuity.

I work part time and my employer does not provide a pension so I set one up myself with NFU for just over £50 a month.

I have been paying into this for a few years now but my code has only changed since I filled in a self employed tax return this year due to doing Avon for a while (which I now no longer do).

Is this correct and if so does anyone know what I need to do about the previous years ?

dunstonh

Retirement annuity contracts are paid gross. So the tax relief has to be reclaimed via your tax return or tax code. Personal pensions are paid net of basic rate tax so dont need to do that.

If you havent claimed the tax relief in past years then you should contact HMRC to let them know.

Tabatha_Kitten

Many thanks for your reply Dunstonh.
Sorry if this sounds thick but what is the difference between an annuity and a personal pension ?
I think I have made a mistake on my tax return as what I have with the NFU is a personal pension plan.
When I look at the statement they sent me I paid £51.28 then it shows a receipt of £12.82 "tax releif".
Am I right in thinking my code shoulnt have been changed ?
What is the best way to go about putting this right?

CLAPTON

when you pay into a private pension the pension fund reclaims 20% tax from HMRC on your hehalf
you can only claim additional tax relief if you earn sufficient to pay 40% tax then you can reclaim the additional 20% tax

so on your 51.28 payment they would reclaim (51.28/.8 - 51.28) = 12.82 in tax on your behalf

Tabatha_Kitten

Thank you.
Just to clarify. Does this mean that I filled something out incorrectly on my tax return and that my tax code should not have been changed ?

Baz_2

Do you still have a copy of the return you submitted? If so which box did you put your pension contributions into? There's one box for pension paid net and another for contributions paid gross. If you have put it in the gross box then I can see why the revenue have done this.

If you have put it in the wrong box you can write to them asking to repair the return by removing the amount from that box and putting it into the correct one and also asking them to correct your tax code.

dunstonh

Do you have a personal pension or a retirement annuity contract?

Retirement annuity contracts are sometimes referred to as section 226 retirement annuity contracts. They were abolished in 1988 but those that had them already could keep them. Personal pensions only came into existence after 1988.

Take a look at your pension paperwork to see what you have.=

Tabatha_Kitten

Its definately a personal pension.
On the pension statement it shows two entries for each month - one for my contribution & one for the tax relief.
I did the tax return online and didnt print a copy but I must have filled in the wrong box - gross instead of net.
Thank you all for your help. I will write to them tomorrow and hope they understand it was a genuine mistake and not penaliaze me for not spotting it sooner.