Pension Contribution help

starfish10

Hello There

I have a question to ask as you have asked about pension contributions and student finance/tax credit

I am going to be making application for my son soon for finance

When it comes to my income I earn a part time wage of £7988 taxable pay (This is the gross amount i have earned). I have paid £5969 from this into the employer pension scheme. The government have then added 20% tax relief to this. the employer has made contributions of £589

On my payslip the pension is not deducted before tax it is in the deductions column

On my p60 my taxable pay reads as £7988, the contributions are not taken off or mentioned. When sending my income details to Tax Credits I took off the grossed up contributions made me £7988- my contr = tax relief. Tax Credits queried this as my employer is large and sends wage info direct to them so the two did not match. I sent info to back this up and they did not reply. When I phoned to give complete income details for my husband and I . the guy said I was wrong and argued with me.

I just dont get it!!!! however I try I cant get my head around it. I have been to citizen advice and they agree with me.

Does anyone on the forum understand what is wrong here. Are my contributions from net or gross?

Icequeen99

starfish10 wrote: »

Hello There

I have a question to ask as you have asked about pension contributions and student finance/tax credit

I am going to be making application for my son soon for finance

When it comes to my income I earn a part time wage of £7988 taxable pay (This is the gross amount i have earned). I have paid £5969 from this into the employer pension scheme. The government have then added 20% tax relief to this. the employer has made contributions of £589

On my payslip the pension is not deducted before tax it is in the deductions column

On my p60 my taxable pay reads as £7988, the contributions are not taken off or mentioned. When sending my income details to Tax Credits I took off the grossed up contributions made me £7988- my contr = tax relief. Tax Credits queried this as my employer is large and sends wage info direct to them so the two did not match. I sent info to back this up and they did not reply. When I phoned to give complete income details for my husband and I . the guy said I was wrong and argued with me.

I just dont get it!!!! however I try I cant get my head around it. I have been to citizen advice and they agree with me.

Does anyone on the forum understand what is wrong here. Are my contributions from net or gross?

Yes, you are correct. It is the gross amount of the pension contributions you need to deduct.

You will need to appeal your award notice when you get it.

IQ

starfish10

If this is true then I should have been awarded tax credits should I appeal that too as I argued with the guy when giving final earning figures and he would not have it at all and in the end I had to give in

xylophone

http://www.entitledto.co.uk/help/tax-credit-pension-contributions

starfish10

I have read that many times but can't find a definitive answer as pensions are complicated. My contributions are not taken off for P60 as some peoples are. (I don't understand why)

xylophone

What exactly does your pension statement show?

Icequeen99

starfish10 wrote: »

I have read that many times but can't find a definitive answer as pensions are complicated. My contributions are not taken off for P60 as some peoples are. (I don't understand why)

There is a definitive answer.

If pension contributions are deducted before tax and NI are calculated (so they would show as deducted on your P60 figure) then you make no adjustments to tax credits because they are already been paid on the correct salary.

If pension contributions are deducted after tax and NI are calculated, so from your net pay, then you need to gross them up and deduct them from your income figure.

It is in the legislation and the technical manual. http://www.hmrc.gov.uk/manuals/tctmanual/TCTM04003.htm

I wouldn't rely on the helpline for this.

Just get your final award notice and submit an appeal explaining that you pay your pension contributions from your net pay and therefore you can deduct the gross amount from your income as per tax credit rules.

IQ

starfish10

Hi

On my payslip they(my pension contributions) are in the deductions column in the same box as tax and Ni ( I haven't paid any tax)in the order of tax NI then pension

On my P60 all that shows is my gross/taxable pay and the contributions are not taken off this figure.

So could I go back and complain to tax credits as I sent them the info and pension information from the pension company to show that I had paid 95% of my pay to my pension.

starfish10

'When I rang them about this I was told that it was only if you paid into a private pension scheme and not an employers one? Apparently this is because employers generally make a untaxed contribution towards pension schemes'

I found this on another post which makes it more confusing

xylophone

http://www.retirementplanner-sw.com/digital_assets/15896/Relief_at_source_and_net_pay_-_avoiding_confusion.pdf

You do not earn enough to pay tax but you do have relevant earnings.


You may invest up to the total of your earnings (net of basic rate tax) into a "relief at source" pension scheme and receive basic rate tax relief.

Suppose you earned £6000 a year. You would not pay any tax.

Nevertheless, you could pay £4800 into a pension scheme operating relief at source and your pension provider would claim £1200 and add this to your pension.

For tax credits purposes you would declare a pension contribution of £6000.

If you had no relevant earnings, You could make a net payment of £2880 into a pension scheme and the provider would claim tax relief of £720 - you would declare a gross payment of £3,600 for tax credit purposes.

Is your scheme using "relief at source" or "net pay"?

If you have earned income but do not pay tax and your employer uses the net pay arrangement, you do not benefit from tax relief.

Have a look at this https://forums.moneysavingexpert.com/discussion/4812263

Try PM to Jem16?

zagfles

starfish10 wrote: »

'When I rang them about this I was told that it was only if you paid into a private pension scheme and not an employers one? Apparently this is because employers generally make a untaxed contribution towards pension schemes'

I found this on another post which makes it more confusing

It's a common problem. As IQ says, contributions to any pension scheme are deductible for the purposes of tax credits.

The problem is that for most occupational schemes, pension contributions are taken before tax is applied, and the taxable/P60 income for the year shows income after pension conts have been deducted. So for most people, occupational scheme pension conts are already deducted so they shouldn't be deducted again.

Because of this the "helpline" seem to have very simple instructions that payments to an occupational scheme shouldn't be deducted. But in your case where conts are taken from net pay, you can definitely deduct the grossed up amount from the income you declare.

Don't bother phoning them, you'll likely get nowhere with the front line staff. Write to them with evidence that your pension conts are taken from net pay, eg two consecutive payslips, annual statement from the pension provider showing they reclaim the tax from HMRC etc.

See https://forums.moneysavingexpert.com/discussion/5072385 for a success story.