Question about 40% Taxation re Pensions

Tweeky

Hi only just noticed that the money I'm putting into my pension is only getting standard tax rate applied to it. Rather than the 40% it should be.

Is it my employers responsibility to change this or is this something I need to claim back by filling in a tax return form.

I've been making contributions for about 3 years, so would I be able to claim back the money for all my contributions or is it too late now?

jem16

It is only the basic rate of tax which is applied to your pension. The extra 18% would be reclaimed via your tax return.

You should get in touch with the tax office. I believe they can go back 6 years.

dunstonh

There is a box on your tax return asking how much your pension contributions are and if you have filled that in correctly, you have been getting the extra tax relief. If you havent filled it in, then do as jem says.

blisteringblue

I'm in exactly the same position as our company got sold off last year and we lost our Final Salary Pension scheme. Its replaced by a new scheme which I do like the sound of as you get your own personal pot with a lot more choice where it's invested.

However, a couple of years ago the inland revenue told me they didn't need a tax return any more and I went back to normal PAYE / P11D etc

Since the new pension I rang the tax office asking how I would claim the extra 40% tax relief. I fully expected them to say, well start sending you a tax return again, but no, they just said write in to my local tax office with the details and send the Contribution Payment Certificate (CPC) that the pension company sent out and they would sort it out via my tax code.

As easy as that and still no tax return

Sulumar

Hi

Can I ask a question? If you need to tell the Inland Revenue in tax return or the local tax office that you're entitled to higher rate tax relief, how does the actual rebate end up in the pension fund?

jem16

As far as I'm aware it won't end up in the pension fund. The refund will come back to you either by cheque or through your tax code.

Perhaps you could pay that extra amount into your pension as a single payment.

Sulumar

And then claim basic rate tax relief on it?! Seems strange, but if that's how it works, fair enough.

EdInvestor

Sulumar wrote:

And then claim basic rate tax relief on it?! Seems strange, but if that's how it works, fair enough.

Ssshh, next thing you know there'll be an edict out about recycling rebates...;)

blisteringblue

Sulumar wrote:

Hi

Can I ask a question? If you need to tell the Inland Revenue in tax return or the local tax office that you're entitled to higher rate tax relief, how does the actual rebate end up in the pension fund?

But it is already in your pension fund It goes into your pot before the deduction of any tax?

ie say you pay £300 into your pot each month, under PAYE although £300 has gone in this has only cost you around £240 as a deduction from your salary. But being 40% taxpayer it should be costing £180 so its that you are claiming back, but the original £300 is still in your pension fund, its just not cost you that to do it.

EdInvestor

If a company pension scheme is involved, the money goes into your fund.But with a personal pension, it doesn't.

You have to claim it back from the Revenue but you get the money in cash.It's not locked up in the pension

Paul_Herring

But it is already in your pension fund It goes into your pot before the deduction of any tax?

Not for a personal pension - the money going in has had tax deducted.

Once it hits the pot, the pension fund company reclaim basic rate tax for you - you have to claim the difference between the basic rate and your marginal rate from the taxman.