Lack of pension and advice about tax sought

losthere

I am just starting to sort myself out regarding money and pensions.
My main question is this;

If I contribute to a stakeholder pension by employer will take my contribution from my grosspay I think. One the right hand side of the pay slip is
Pay
Pay - £2000
overtime - £400
pension (400)
total gross pay- £2000
and on the right side is deduction
NI £100
Tax £200
Tota; deductions £300

Netpay - £1700
Numbers are made up...
Could i claim the £400 i put into my pension from the tax man or because the sum has been taken from my gross pay and not from my net, there is nothing for me to do....

Also are pensions worth investing in, i have read online that due to the yearly charges pensions are worth it.

xylophone

Stakeholder pensions operate Relief At Source

See https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

The tax relief on a stakeholder is automatic if you are a basic rate tax payer - you would only have to claim additional tax relief if you paid tax at a higher rate.

greenglide

xylophone wrote: »

Stakeholder pensions operate Relief At Source

See https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

The tax relief on a stakeholder is automatic if you are a basic rate tax payer - you would only have to claim additional tax relief if you paid tax at a higher rate.

But in the example above the pension contributions are coming out of the salary before tax is calculated so the tax relief would be correct irrespective of whether the OP paid higher rate or not?

If it was deducted from net pay and the pension scheme gave the relief then the OP would have to claim the tax back on the HRT but that is not what his example shows.

jem16

losthere wrote: »

Could i claim the £400 i put into my pension from the tax man or because the sum has been taken from my gross pay and not from my net, there is nothing for me to do....

if your contributions are taken before tax from your gross pay, then you have nothing to reclaim as you're getting full tax relief automatically.

Also are pensions worth investing in, i have read online that due to the yearly charges pensions are worth it.

Pensions are just a tax wrapper - what counts are the investments within. You will get the same charges using a S&S ISA as you will with a pension - it's only the tax that's handled differently.

Over 40/45 years of a pension it's definitely worth it as cash savings would not be good enough due to inflation risk. As you will also get employer contributions they are definitely worth using.

xylophone wrote: »

Stakeholder pensions operate Relief At Source

Stakeholders, if done privately, operate Relief at Source.

However some companies offer stakeholder pensions where contributions are taken from gross pay.

Basically if your taxable pay is less than your gross pay by the amount of the pension contribution, then all tax relief has been given and there is no need to do anything further.

atush

Who anywhere online as told you that pension charges are so high as to make pensions not worth it? I'd like to see a link thanks?

In your case, if you have 400 you are paying into a pension before tax, then you would not get that 400 back if you didn't as you would pay tax and NI on it? You;d only get abt 270 as you would pay BRT tax and nics on that 400?

xylophone

But in the example above the pension contributions are coming out of the salary before tax is calculated so the tax relief would be correct irrespective of whether the OP paid higher rate or not?

Yes indeed - and the link in my post explains this

"2. Tax relief
You can get tax relief on private pension contributions worth up to 100% of your annual earnings. This means either you don’t pay Income Tax on contributions to your private pension or you get tax back.

You don’t usually have to claim tax relief on pension contributions - you get it automatically if either:

you’re in a workplace pension and your employer takes contributions out of your pay before deducting Income Tax

your pension provider claims tax relief for you at a rate of 20% and adds it to your pension savings - this is called ‘relief at source’
You get relief at source in all personal and stakeholder pensions, and some workplace pensions."

The OP said "If he contributed to a stakeholder.".... and "Numbers are made up..." but also "Could i claim the £400 i put into my pension from the tax man or because the sum has been taken from my gross pay and not from my net, there is nothing for me to do...."


That said, James d has
added

However some companies offer stakeholder pensions where contributions are taken from gross pay.

which is useful to know.

jem16

xylophone wrote: »

That said, James d has
added

No he didn't

xylophone

Sorry Jem - I had just been reading a post from James!