Tax relief on pension contributions for higher rate tax payer?

Mrs_Money

My husband has been paying into his occupational pension for around 10 years, at least 5 or 6 of those he's been a higher rate taxpayer. I thought he had to claim back some tax for his contributions, but he asked his HR dept and they told him it's all done automatically. However, on checking his salary slip we see that his tax code is just the standard personal allowance of 810 (or is that not relevant?).
We've run out of people to ask, so I'm hoping that someone on here can come up with the answer!

Linton

Mrs_Money wrote: »

My husband has been paying into his occupational pension for around 10 years, at least 5 or 6 of those he's been a higher rate taxpayer. I thought he had to claim back some tax for his contributions, but he asked his HR dept and they told him it's all done automatically. However, on checking his salary slip we see that his tax code is just the standard personal allowance of 810 (or is that not relevant?).
We've run out of people to ask, so I'm hoping that someone on here can come up with the answer!

The HR people are correct:

For work pensions the pension contribution can be taken straight off the gross pay before tax is calculated. The pension amount is never taxed and so you dont need a rebate. This should be itemised on the pay slip.

Mrs_Money

Yes, under normal circumstances, but I believe it's a bit more complicated for higher rate tax payers?

jem16

Mrs_Money wrote: »

Yes, under normal circumstances, but I believe it's a bit more complicated for higher rate tax payers?

It's not any more complicated.

If the pension contributions come out of gross salary then tax relief is automatic whether basic rate or higher rate as it reduces your taxable pay.

If the pension contribution comes out of net pay, then only basic rate tax relief is added to the pension and the higher rate taxpayer must claim the other 20% from HMRC.

Which way does your husband pay his contributions? Most occupational pensions are the first way but if it's a group personal pension it's the second way.

bigadaj

Is that always the case with group personal pension plans? My contributions are by salary sacrifice but I thought most company schemes would come out of gross pay in any case.

jem16

bigadaj wrote: »

Is that always the case with group personal pension plans?

It tends to be but there may be exceptions.

My contributions are by salary sacrifice but I thought most company schemes would come out of gross pay in any case.

Not always and it does catch a few folk out.

Linton

My most recent pension was a gpp paid out of gross. I think that is normal for large employers.

jem16

Linton wrote: »

My most recent pension was a gpp paid out of gross. I think that is normal for large employers.

Perhaps it's changed? From all I have read recently GPPs are paid from net pay.

http://www.professionalpensions.com/professional-pensions/news/2140330/hundreds-thousands-missing-pensions-tax-relief

mgdavid

I'm in a GPP and it's paid via salary sacrifice.

Linton

Tried to find old payslips etc - but it was 7 years ago so cant really confirm.

OP is advised to check from payslip that Pension is paid gross.

nearlyrich

I am a higher rate tax payer my company pays my pension as salary sacrifice and my total pension contribution includes the tax element..and the saved NI as they kindly let us take that too. It's a lot less fuss this way than it used to be when I had to fill in a tax return to get my tax rebate on my pension and then transfer the money to the pension company.