40% income tax and pension

nh101

My husband pays 40% income tax, and pays £200 a month into a personal pension plan. He fills in a tax return each year. Does the government automatically top up his pension with the appropriate amount of tax or does he need to reclaim this in the tax return?

He only mentioned this to me last night, he's had the pension plan since before we met and I assumed everything was OK with it, but now he wonders whether the tax has been added to it.

Thanks in advance to anyone who can help

PPJ

If the contributions are made personally (i.e. not by the employer), then the contributions do get topped up, but only by the amount appropriate for a basic rate tax-payer (*not* the full amount for a 40% tax-payer).

He needs to state the contributions on his tax return to get the balance refunded.

dunstonh

If he has been declaring the pension contributions on his tax return, then HMRC take that into account when calculating his tax liaiblity and reduce it down accordingly.

This often includes them placing an entry on the tax code to show the pension contribution of offsetting the tax relief against extra tax he would have to pay. A common method is to increase (or reduce) the tax code the following year to reflect the tax position for the year before.