Tax relief on pensions and and retirement annuity

RaiderHammer

Hi can anyone help.

I have a personal pension and retirement annuity - two different polices.

Following a conversation with HMRC tonight I think I may have been claiming tax releif for one of the polices that I should not be claiming. This dates back to around 1989 I think.

I have asked my plan holder to confirm if I should be claiming tax releif on both plans but I think the one where I am paying £80 a month on the policyI should not be claiming tax relief. Genuine mistake (if I am wrong) but where do i stand now.

If I have to pay back I guess HMRC will want to take the claim back to day one, because its my error I understand this.

How soon are HMRC likely to want repayment? Instantly or are they likely to change my tax code over the coming years to get it back?

Any infomation would be much appreciated.

Any idea how much i might owe if indeed I do?

Thank you.

jem16

RaiderHammer wrote: »

I have asked my plan holder to confirm if I should be claiming tax releif on both plans but I think the one where I am paying £80 a month on the policyI should not be claiming tax relief. Genuine mistake (if I am wrong) but where do i stand now.

At a guess this is the personal pension and if you are not a higher rate taxpayer then no you shouldn't have been claiming tax relief as the provider claims it for you.

How soon are HMRC likely to want repayment? Instantly or are they likely to change my tax code over the coming years to get it back?

You would need to ask HMRC that.

Any idea how much i might owe if indeed I do?

Thank you.

£80pm is £960 per year. Tax relief on that would be £192. Multiply that by the number of years you've been claiming it.

RaiderHammer

If I have it right from the tax office...

Personal pensions - No tax relief is given.

Retirement Annuity - Tax relief can be claimed.

I never knew there was a difference until tonight...

I leinent are HMRC likely to be with me?

jem16

RaiderHammer wrote: »

If I have it right from the tax office...

Personal pensions - No tax relief is given.

Basic rate tax relief is given at source by the pension provider. For example if you paid in £80, it would automatically be uplifted to £100 by your pension provider. You always pay in the net amount.

If you are a higher rate taxpayer, you need to claim the extra 20%.

Retirement Annuity - Tax relief can be claimed.

Correct as payments are always made gross.

I leinent are HMRC likely to be with me?

As long as you bring it up with them, I would imagine they will take it as a genuine mistake.

RaiderHammer

Would they look to charge me interest on the amount under paid?

jem16

RaiderHammer wrote: »

Would they look to charge me interest on the amount under paid?

I have no idea.

You really just need to get in touch with HMRC and they will answer all your questions.

jamesd

Personal pensions normally do get tax relief. for basic rate tax payers making contributions themselves from after tax pay, 25% is normally added to the amount paid in by the pension provider to provide basic rate tax relief (changes as basic rate changes). A higher rate tax payer would tell HMRC about the amount after the tax relief (call it the gross amount) and HMRC would adjust the tax code as needed to give the relief, normally done today by increasing the basic rate tax band.

If an employer is paying in pre-tax money then no tax relief is available because it's already been given by coming out of pre-tax money. Also no higher rate tax relief to claim in this case because you already have that as well.

Can you say a bit more about who was actually paying the money into the pension so we might be able to check whether you were getting tax relief or not?

HMRC would charge interest but would probably not charge a significant penalty for an unintended error where you tell them without them asking you first. Maybe 10%-20% of tax owed as a penalty, more seems unlikely. Gets as high as 100% if they have to chase the tax payer hard to work out the tax that is due.

RaiderHammer

I was the one paying the money in, not an employer. I just didn't realise the different between the two.

jamesd

Thanks. Probably means that you got tax relief added automatically to the personal pension. Something you can probably check with the pension provider. That'll confirm whether you do or don't have a tax bill.

FatherAbraham

RaiderHammer wrote: »

Hi can anyone help.

I have a personal pension and retirement annuity - two different polices.

Following a conversation with HMRC tonight I think I may have been claiming tax releif for one of the polices that I should not be claiming. This dates back to around 1989 I think.

...

Any infomation would be much appreciated..

Hello RaiderHammer,

There's a special page of information about retirement annuities on the HMRC website: http://www.hmrc.gov.uk/pensioners/pension-retirement.htm

The information there is principally about taxation of income from such policies, but the contact details within the page may help you get answers to your questions.

Warmest regards,
FA

mania112

if you are a basic rate taxypayer there is never a need to claim the tax relief in a personal pension.