Pension tax relief

Trumpeter

My wife & I have recently opened SIPPs with lump sum payments, both with different providers. On checking our statements, I see that the tax relief has been added to my pension (Scottich Widows) but my wife's hasn't Hargreaves Lansdown). This was only done just prior to the end of the last tax year so am I just being too hasty in expecting it to be applied to both?

dunstonh

Some companies pre fund transactions. Others do not. You tend to find the big players will prefund tax relief immediately. The less capitalised companies tend not to prefund and will wait until HMRC pay them the tax relief before adding it. HL do not prefund. Prefunding costs money as you are effectively lending it for a couple of months. Some companies cannot afford to do it.

Prefunding (or not) is also often used on withdrawals and fund switches.

xylophone

the big players

You're not implying that HL is a tiddler!:eek:

Some companies cannot afford to do it.

And HL is among their number?:rotfl:

But yes, a couple of family members have HL SIPPS and simply have to wait for the tax relief to wend its weary way from HMRC.:(

dunstonh

You're not implying that HL is a tiddler!

In the world of pensions it is not in the same league as the big pension providers.

And HL is among their number?

I don't know why HL don't do it. However, it does tend to be the smaller players with less cash available that don't. If they did it, they would probably have to add 0.x% onto their charges to compensate. So, that is a possible reason.

Trumpeter

Thanks for the replies

Freecall

Having had pensions with both SW and HL I can confirm that they have always operated as dunstonh indicates. SW has the full amount ready for investment immediately whereas HL wait until HMRC come up with the cash.

The only comment I would make however is that when you make the investment on the HL website it does tell you the date that the tax will be credited and in my experience that date is always spot-on for the credit to appear.