Understanding Tax Relief (Novice)

eddy21

Hi,

I've just opened a private pension and I'm a 40% tax payer.

Am I better to have my tax code adjusted to claim the extra 20% relief or submit a Self Assessment?

If my tax code was adjusted, how would my take home pay be affected?

Sorry for the novice question...

jem16

eddy21 wrote: »

Am I better to have my tax code adjusted to claim the extra 20% relief or submit a Self Assessment?

If your tax code was adjusted you'd get the tax relief earlier.

If my tax code was adjusted, how would my take home pay be affected?

You would pay less tax so it would be higher.

hugheskevi

Another option is to do both.

Doing it exclusively via Tax Code means you will probably need to change Tax Code each February (in time for changes to be reflected in March pay). That enables you to be fairly sure about total taxable income and pension contributions. However, you then have to hope there are no surprises in income for the rest of the tax year otherwise you will need further amendments.

Doing it exclusively via Self-Assessment means waiting for tax relief.

Personally I like doing Self Assessment, as it is very easy and quick if your affairs are quite simple and you keep good records. Much faster than writing to HMRC.

eddy21

Thanks for the quick response, so in my eyes I'm probably better to adjust my tax code.

eddy21

Personally I like doing Self Assessment, as it is very easy and quick if your affairs are quite simple and you keep good records. Much faster than writing to HMRC.[/QUOTE]

I've never done a SA so it's a bit of a mine field and ultimately why I'm dithering.