Pension Contribution & Tax Query

Cypruseast

Hi a newbie on here so hello to everyone!! Been a lurker for sometime but decided to get more involved and I have a question I am looking for some support on.


As a higher rate tax payer (£50k+)with a daughter I am now having to fill our a tax return due to the impact of the child benefit changes, having always been PAYE I find the document quite complicated to get my head around. My big issue is around my contributory pension. I have a couple of points and then queries:


1. For the tax year ending 5th April 2014 I have contributed £3683 towards my pension.


2. My Total Gross Pay includes my pension contribution within the figure on my last payslip.


3. My Gross for Tax for the year ONLY has £1222 removed from it which equates to 5 months of childcare vouchers @ £243 per month. It does not have my pension contributions removed from this figure.


4. So based on the point above my Gross for Tax does not have my pension contributions removed prior to tax.


5. My Pension Plan Provider on my statement shows that the payments into my plan include my payments and ALSO the tax relief added (approx. £917) alongside my employer's payments. So I am getting my 20% relief added at this point.


My question is around what I should be stating on my tax return.


1. On section 1 in employment regarding the pay for employment - I am stating what is on my P60 which is my Total Gross for Tax (thus including my pension contributions)


2. When I go to the tax relief section ref "Paying into registered pension schemes and overseas pension schemes" this is where I am very confused. Should I be doing either or both of:


- Filling in section 1 "(Payments to registered pension schemes where basic tax relief will be claimed by your pension provider"). If I am to fill this in I assume I total the amount I paid in from my pay and the tax relief amount that the pension plan provider added??


Or/and


- Should I fill in section 3 ("Payments to your employer's scheme which were not deducted from your pay before tax"). I am pretty sure I need to fill this section in and at this point I should be filling in the figure of £3683 that I mentioned above - is this correct??


The real query is around do I fill out section 1 & 3 of this tax relief section or just section 3?


I believe that I am also able to claim back the other 20% being a higher rate tax payer and as such is there anything other than above that I should be doing.


I am really sorry if this is confusing or has been "done" to death but I would appreciate advice on this matter if folks can afford to take the time to respond.


Many thanks in advance!

jem16

Cypruseast wrote: »

1. On section 1 in employment regarding the pay for employment - I am stating what is on my P60 which is my Total Gross for Tax (thus including my pension contributions)

That's correct. Your P60 gives your total taxable which is what you put in the tax return.

2. When I go to the tax relief section ref "Paying into registered pension schemes and overseas pension schemes" this is where I am very confused. Should I be doing either or both of:


- Filling in section 1 "(Payments to registered pension schemes where basic tax relief will be claimed by your pension provider"). If I am to fill this in I assume I total the amount I paid in from my pay and the tax relief amount that the pension plan provider added??

This is where you will enter your gross pension contribution - ie pension payment plus tax relief. So £4600 goes in this section.

Should I fill in section 3 ("Payments to your employer's scheme which were not deducted from your pay before tax"). I am pretty sure I need to fill this section in and at this point I should be filling in the figure of £3683 that I mentioned above - is this correct??

You would not fill in anything here. This section is only where your pension provider has not added on the basic rate tax relief.

The real query is around do I fill out section 1 & 3 of this tax relief section or just section 3?

You should only complete Box 1.

I believe that I am also able to claim back the other 20% being a higher rate tax payer and as such is there anything other than above that I should be doing.

No that's all that is needed.

Cypruseast

Thanks for this Jem! I had asked an in-house accountant and he told me to fill out section 3, but he half admitted he wasn't really to sure etc...

That helps to clarify it anyhow.

PS I assume that they will recognise this is my contribution and can breakdown the 20% tax relief from the total. Does the additional tax relief for the extra 20% get re-paid through my tax code or in a lump sum payment (assuming there is any due after the child benefit repayment is made).

jem16

Cypruseast wrote: »

PS I assume that they will recognise this is my contribution and can breakdown the 20% tax relief from the total.

If you put in the total gross payment that's all that's needed - ie the £4600.

Does the additional tax relief for the extra 20% get re-paid through my tax code or in a lump sum payment (assuming there is any due after the child benefit repayment is made).

Normally it would get paid as a lump sum refund. What they may also do is amend your tax code from now on assuming you normally make the same contributions each year.

Cypruseast

Jem can I trouble you with another question??

How come if I google P60 "Pay in this employment" most discussions/comments suggest that the figure as shown on the P60 will be gross pay less any amounts deducted before tax and on most occasions they mention that this will include the deduction of pension contributions.

I know you have confirmed that I input the figure as per my P60 into section 1 but this figure on my P60 does not have my pension contributions deducted. Having had problems with the incorrect tax codes for a few years (long story involving someone else using my national insurance no.) I am concerned that they will assume my P60 figure will be net of my pension contribution and thus I could potentially find myself (incorrectly) owing additional tax.

Am I worrying for no reason and will filling out section 1 of Payments to registered pension schemes where basic tax relief will be claimed by your pension provider ensure that they know the p60 figure does not include the removal of the pension contributions??

Sorry for being a torture!!

jem16

Cypruseast wrote: »

Jem can I trouble you with another question??

How come if I google P60 "Pay in this employment" most discussions/comments suggest that the figure as shown on the P60 will be gross pay less any amounts deducted before tax and on most occasions they mention that this will include the deduction of pension contributions.

It's simply because for many (if not most) company pension schemes, the P60 taxable income figure is the gross pay less the pension contributions. Mine works that way. In this case the pension provider does not add on the basic rate tax relief.

In your case the pension provider does add on the basic rate tax relief so your contributions are paid after you are taxed.

I know you have confirmed that I input the figure as per my P60 into section 1 but this figure on my P60 does not have my pension contributions deducted. Having had problems with the incorrect tax codes for a few years (long story involving someone else using my national insurance no.) I am concerned that they will assume my P60 figure will be net of my pension contribution and thus I could potentially find myself (incorrectly) owing additional tax.

The P60 always shows the total taxable income and that's the figure HMRC will use too. It's nothing at all to do with pension contributions.

Am I worrying for no reason and will filling out section 1 of Payments to registered pension schemes where basic tax relief will be claimed by your pension provider ensure that they know the p60 figure does not include the removal of the pension contributions??

Sorry for being a torture!!

You are worrying for no reason. Fill in section 1 as I told you.

Just for reassurance - I contribute to two pension schemes. One is paid from my gross pay so my taxable income is reduced on my P60. This pension contribution never gets mentioned to HMRC. I also pay into a SIPP from my net pay so the SIPP provider adds the basic rate tax relief. I then complete section 1 as I told you to for this pension.

zagfles

Cypruseast wrote: »

Jem can I trouble you with another question??

How come if I google P60 "Pay in this employment" most discussions/comments suggest that the figure as shown on the P60 will be gross pay less any amounts deducted before tax and on most occasions they mention that this will include the deduction of pension contributions.

Because that's the way most employers do it.

Cypruseast

Thanks very much Gem you are a star!!!

watchingthepennies_2

Sorry to comment on this old thread but I'm thinking I may have a similar situation here.


On March payslip, both gross pay ytd and taxable pay ytd are the same (same as P60 too), from reading above comments, does this suggest that my company pension is paid after tax? I've only noticed this because on doing my SA the tax stated per the ANI calculator for child benefit purposes and the tax due on the return are different. It is higher on the return because I've not recorded the pension contributions, I was also confused re the 2 questions on contributions. Any advice would be welcome.

xylophone

http://www.hmrc.gov.uk/adjustednetincome/

Have you seen this?

watchingthepennies_2

Yes, just confused over the pension deduction from pay. I had assumed it was deducted before I was taxed but on closer inspection I don't think this the case. Just trying to make sense of the correct way to enter the data and on searching found this thread.