Pension Tax Relief

fiji_dave

Hi there,

I'm in the process of claiming back the 40% pension tax relief - going back as far as 2008/09.

For the current tax year HMRC have changed my tax code to account for the tax relief by including a -£1237 amount in the code.

Does this mean I should effectively pay £412 less in tax each month for the next three months?

Also, can anyone simplify the calculation for me in working out how much I'll be owed for the previous years.
for example I paid £2913.4 in contributions in 2008/09.
Is there an easy to follow formula? Does it depend on how much over the 40% bracket I am salary-wise?

I've tried a few ways of calculating, but come up with a different number each time!

Cheers
Dave

CLAPTON

assuming you are paying your pension out already taxed income then the system works like this


if you pay out of taxed income 2913.4 then the pension company will reclaim basic rate tax (20% ) so your pension increases by £3,641.75 (i.e. 2913.4/.8)

if you are a baisc rate taxpayer then that's the end of it.

if all of the 3,641.75 is above the 40% band then you are entitled to a refund of 738.25 (i.e. 20% of 3,641.75)

if you are only partly over the 40% then you only get refund of the amount over the limit.

if they have adjusted your tax allowance by -1237 then that will reduce your tax by 20% of 1237 i.e. £247.4

fiji_dave

Thanks Clapton!

I think that ties with one of the answers I calculated. I've sent of a letter to HMRC and I was relying on them getting the numbers right - but wanted to calculate it myself just to be on the safe side.


Cheers
Dave