Tax Return: Pension Input Period versus Contributions

DoTheRightThing

This is a tricky one. I need to know whether to put, on my forthcoming Self-Assessment Tax Return, contributions during a tax year, or contributions during the annual Pension Input Period which ends in that tax year on, say 1st of May.

I am aware that there are leaflets from HMRC, several of which I have read, and none of which are able to answer this question.

When filling in Box 4 (Pension) of the tax return the question is asked: -

"You have said that you paid into a personal pension and retirement annuity in the tax year 2013-14. Please complete the following questions."

The first box requires: -"Payments to registered pension schemes where basic rate tax relief will be claimed by your pension provider (called 'relief at source'). Enter the payments and basic rate tax:"

The (i) note states: -
"Pension payments

Under 'Relief at source' arrangements, payments to registered pension schemes are made after tax relief at the basic rate (in 2013-14, 20%). The pension provider will have claimed basic rate tax relief on your behalf and added it to your pension fund. You will have made a 'net' payment. You should enter the gross amount; which is, the amount you paid plus the tax relief.
These amounts may be on any pension certificate or receipt you get from the administrator, or you can work it out by dividing the amount you actually paid by 80 and multiplying the result by 100.
If you pay tax at 40%, or both 40% and 45%, you are entitled to further tax relief. It will be automatically calculated and the credit included in your tax calculation.
If you have a tax code, to help HM Revenue & Customs get the code right enter details of any 'one-off' pension payments included here in the 'Any other information' field at the end of the 'Fill in your return' section. One-off payments are payments made in the year to 5 April 2014 that you do not intend to repeat in the year to 5 April 2015."


BACKGROUND FACTS: -


1) I am a member of three pension schemes. Two of them have a Pension Input Period which ends on the 5th April each year (nice and easy!). One of them (Aegon) has a Pension Input Period which ends on 1st May 2013 and then again 1st May 2014, and it takes 12 contributions per year on the first of each month by direct debit irrespective of what day of the week it is (i.e. including weekends).

2) I am a higher rate tax payer.

3) I am aged between 37 and 41, for general information!

4) I am aware that the Annual Allowance is calculated through use of Pension Input Periods that *end* in a tax year - so the relevant Aegon PIP is that ending 1.5.2013, and I can generate a number for the Annual Allowance.

5) I have unused Annual Allowance from previous tax years.

6) I have contributed towards the top end of my Annual Allowance in this tax year as I inherited money.


7) I need to know what my contributions are for the purposes of the tax return, and I need to know whether I should writing to HMRC to inform them that my previous years' tax returns are wrong in this respect.


QUESTION:


In Box 4 of the HMRC Tax Return, for my Aegon pension scheme, should I: -

a) fill in contributions as paid under my direct debit to Aegon, (grossed up excl higher rate tax element), OR

b) should I only fill in the number which is the amount contributed in the *Pension Input Period* ending on 1.5.2013, and thus save for next tax year the contributions which will be summed up for the Pension Input Period ending 1.5.2014 (and also grossed up, excl higher rate tax)? AND

c) If the answer is (b), then I should, presumably, alert HMRC to the fact that I have been filling the wrong numbers in on the tax return for the last ten years, in that I have been filling in the amount I *contribute* and I have paid no attention at all to "Pension Input Periods" because I was unaware of their existence.


Thanks for any help: I realise this is a tricky question but HMRC and the various helpsheets for Aegon, HMRC, Royal London, AVIVA etc do not definitively answer the question, although they do definitively answer how to calculate the Annual Allowance.

Cheers
DoTheRightThing

gadgetmind

You use your actual pension payments during the tax year for the figure for tax relief purposes.

Pension Input Periods are used for tallying up what you've contributed during each tax year for annual allowance and carry forwards calculations.

gadgetmind

Note that I'm not sure what to put in which box but can check if you really need to know. I have ended up paying tax charges due to exceeding the evil "special" annual allowance and will also slightly exceed the annual allowance this year.

DoTheRightThing

gadgetmind wrote: »

You use your actual pension payments during the tax year for the figure for tax relief purposes.

Pension Input Periods are used for tallying up what you've contributed during each tax year for annual allowance and carry forwards calculations.

Thank you. That is helpful. BUT, are you able to refer me to HMRC chapter and verse (i.e. documentary support) to corroborate your answer? I am OK at what to put where on the form (re. your other email).

Cheers,
DoTheRightThing:T

gadgetmind

I fished out all the references a few years ago when myself + accountant created all my spreadsheets, but I don't have them to hand. TBH I still use an accountant for my tax return for exactly the reason that this area is so complicated. I need someone to check and recheck all the figures and to file accordingly.

An ex IFA also fouled up all the PIP figures, so we (self+accountant) had to refile 3 years of tax returns with relevant adjustments,

It's a bit smelly minefield.

zagfles

Tax relief has to be tax years, the PIP is just for AA purposes. When you think about it, it's got to be like this because occupational schemes which take contributions from salary before tax will automatically give relief in the tax year it's paid.

Plus the question is asking about pension conts in the tax year, not in the PIP ending that tax year.

See http://adviser.royallondon.com/technical-central/information-guidance/contributions-and-tax-relief/member-contributions-tax-relief-and-annual-allowance/