Self Assessment - pension tax relief

coley54321

Hi,

Wasn't sure whether to put this in the pensions forum or here, but oh well.

Basically I have been requested by the HMRC to fill out a self assessment for the first time (as a PAYE employee) and have finished it, including my interest received, P11D benefits etc.

However I am struggling to know if there should be a section for my pension tax relief or whether it just comes out in the wash?

For easy of figures lets suggest I earn £45,000 and I pay 4% and my company matches 4%. At the moment my monthly salary slip says:

Deductions/Adjustments: GPP -120.00

Then in the section 'Employers contributions' it says £150.

I don't really understand it; I should not be paying tax on my pension contributions at all, so why do the figures differ?

On top of not understanding the above, I have been told that as a higher rate tax payer I can claim back 'relief' through my online Self Assessment? However, I cannot find a specific pension contributions section in on the self assessment form to enable me to claim the releif. Any ideas?

I've read through all the guides and online help at the HMRC, but it's just not clicking for me. If there's any tax savvy people out there that can explain this to me in layman's terms I'd really appreciate it.

Thank you in advance.

jem16

coley54321 wrote: »

Deductions/Adjustments: GPP -120.00

Then in the section 'Employers contributions' it says £150.

I don't really understand it; I should not be paying tax on my pension contributions at all, so why do the figures differ?

4% of £45k is £1800pa so £150pm. That's what your employer is paying. Your contribution is £120pm net - that is then grossed up to £150 as the pension provider adds on basic rate tax relief at 20% of £150 which is £30. £150-£30 = £120.

On top of not understanding the above, I have been told that as a higher rate tax payer I can claim back 'relief' through my online Self Assessment? However, I cannot find a specific pension contributions section in on the self assessment form to enable me to claim the releif. Any ideas?

At the start of the online self assessment you are asked a series of questions, one of which is something like "Do you pay into a UK pension". If you answer yes to that you will then get the relevant section to complete. In that section you should put your gross contribution of £1800.

jennifernil

OH used to pay 3% of salary into the company scheme. This was deducted first and reduced his taxable salary.

Is that not the normal way of doing it?

coley54321

jem16 wrote: »

At the start of the online self assessment you are asked a series of questions, one of which is something like "Do you pay into a UK pension". If you answer yes to that you will then get the relevant section to complete. In that section you should put your gross contribution of £1800.

Hi Jem. Thanks for your reply. The only things at the start that are options relevant to pensions are....

"Did you receive any UK pensions, annuities or state benefits, for example, state pension, occupational pension, retirement annuity, Incapacity Benefit?" - Don't think that is it, as I'm contributing to a pension scheme, not receiving anything.

"Are you liable to pension savings tax charges or have you received payments from overseas pension schemes?" - No idea about this one???

"Did you make contributions towards a personal pension or retirement annuity? This does not include payments you make to your employer's pension scheme, which are deducted from your pay" - This looks more like it, but it says it doesn't include employee pension schemes, so I'm a bit lost!

Those are the only 3 initial questions I can find that concern pensions in some way.

Any further help you could offer would be great!

coley54321

Ah. I selected yes to the last one to test it out and it gave the following options....

Payments to registered pension schemes where basic rate tax relief will be claimed by your pension provider (called 'relief at source'). Enter the payments and basic rate tax:£

Payments to a retirement annuity contract where basic rate tax relief will not be claimed by your provider:£


Payments to your employer's scheme which were not deducted from your pay before tax:£


Payments to an overseas pension scheme which is not UK-registered which are eligible for tax relief and were not deducted from your pay before tax:£

If you think this is the section I should be filling out (despite it saying "This does not include payments you make to your employer's pension scheme, which are deducted from your pay"), which fields should I fill out and with what amounts?

Thank you

jem16

jennifernil wrote: »

OH used to pay 3% of salary into the company scheme. This was deducted first and reduced his taxable salary.

Is that not the normal way of doing it?

Many company schemes operate in this way. However the OP has a GPP which is operated in the same way as a PP and contributions are made from net pay.

coley54321 wrote: »

"Did you make contributions towards a personal pension or retirement annuity? This does not include payments you make to your employer's pension scheme, which are deducted from your pay" - This lookDs more like it, but it says it doesn't include employee pension schemes, so I'm a bit lost!

That's the one you want.

Your GPP is treated like an ordinary personal pension.

coley54321 wrote: »

Payments to your employer's scheme which were not deducted from your pay before tax:£

I would be inclined to say this is the correct one to use.

Your GPP makes contributions from your net pay after tax.

http://www.lifeinsuranceandpensions.co.uk/group-personal-pension-gpp/

Meant to say the amount you enter is £1800 which is the gross amount you pay.

coley54321

Hi Jem,

Thank you so much for your help. One point, it seems we have two choices here...

1) Payments to registered pension schemes where basic rate tax relief will be claimed by your pension provider (called 'relief at source'). Enter the payments and basic rate tax:£

2) Payments to your employer's scheme which were not deducted from your pay before tax:£

You say you think it should be two? If you select the ? mark icons it gives further explanation. I'm wondering whether it should be number 1 now?

Thanks

jem16

coley54321 wrote: »

You say you think it should be two? If you select the ? mark icons it gives further explanation. I'm wondering whether it should be number 1 now?

Thanks

First thoughts reading it last night would have been for Option 2. Reading through the Help pages, Option 1 certainly fits the bill better.

Do you normally get a pension certificate from the provider? Who is the provider?

coley54321

jem16 wrote: »

First thoughts reading it last night would have been for Option 2. Reading through the Help pages, Option 1 certainly fits the bill better.

Do you normally get a pension certificate from the provider? Who is the provider?

Yes, option 1 does seem more like it. I'm not sure about the certificate. There might be a certificate. I've not noticed one. There might be one somewhere amongst all the paperwork though. The provider is Scottish Widows.

jem16

coley54321 wrote: »

Yes, option 1 does seem more like it. I'm not sure about the certificate. There might be a certificate. I've not noticed one. There might be one somewhere amongst all the paperwork though. The provider is Scottish Widows.

I have had a further read through posts on here and the GPP is just treated like a personal pension as opposed to a company pension.

Option 1 is what you should complete.

The certificate is probably part of your annual statement.

Have you claimed the higher rate tax relief before?

coley54321

jem16 wrote: »

Have you claimed the higher rate tax relief before?

No. Hence all the questions!!

I suspect there are many many PAYE people who do not claim back their pension tax relief. Those that are in the higher tax bracket, but do not earn over £100,000 to be asked to submit a self assessment, and therefore don't think to do it.