Pension Tax relief

Tesco_Tom

After calling HMRC to reclaim overpaid income tax for 2012/13, they decided to change by tax code for the current year (2013/14) to "remove the need to call again next year". In my first salary since the coding change my figures are as follows:-

Gross - 4,250
Tax code - 1136L
Pension – 311.65
Tax – 787.30
NI – 352.88
Net – 2798.17

My pension payment is taken after tax.

Can someone tell be if i will still need to reclaim again next year as it doesn't seem to add up?

Thanks

dtsazza

Your pension payment is taken after tax - but your tax code has been adjusted to 1136L. This represents a higher tax-free allowance than usual (which I think would be 944L), so the end result is that you pay no tax on £1920 which would usually be taxed.

This has the same end result as refunding 20% tax on £3840 of pension contributions. So if that's amount you're expecting to contribute last year (and there are no other factors affecting your tax code), then the figure looks about right.

In any case, I'd recommend checking your tax calculation at the end of the year anyway. Tax codes are just a "best effort" thing to take the right amount of tax throughout the year, but they're not guaranteed to by correct. Once the dust has settled at the end of the year, it'll be straightforward to take your total gross salary and pension contributions from the P60, calculate what the tax should have been on that, and contact HMRC if it's different from what you did pay.

jem16

Tesco_Tom wrote: »

After calling HMRC to reclaim overpaid income tax for 2012/13, they decided to change by tax code for the current year (2013/14) to "remove the need to call again next year". In my first salary since the coding change my figures are as follows:-

Gross - 4,250
Tax code - 1136L
Pension – 311.65
Tax – 787.30
NI – 352.88
Net – 2798.17

My pension payment is taken after tax.

Can someone tell be if i will still need to reclaim again next year as it doesn't seem to add up?

Thanks

I don't think the figures are correct for you. What pension figure did you give HMRC?

As dtsazza said you have been given tax relief on an expected pension amount of £3840. However a net payment of £311.65 works out as a gross payment of £389.56 which gives an annual figure of £4674.75 and that is what you should be claiming tax relief on.

I suspect the net figure is what your tax code has been calculated on.

Tesco_Tom

jem16 wrote: »

I don't think the figures are correct for you. What pension figure did you give HMRC?

As dtsazza said you have been given tax relief on an expected pension amount of £3840. However a net payment of £311.65 works out as a gross payment of £389.56 which gives an annual figure of £4674.75 and that is what you should be claiming tax relief on.

I suspect the net figure is what your tax code has been calculated on.

Thanks Jem16, that is what I suspected, despite giving HMRC the gross contribution (£4,675) and salary (£51,000) anticipated for 2013/14.

Is there any point in contacting them again or just reclaim at the end of the year (again!!)?

jem16

Tesco_Tom wrote: »

Is there any point in contacting them again or just reclaim at the end of the year (again!!)?

I would perhaps ring them and ask them to explain the allowance against the pension for you.