Opening a SIPP for 2015-2016 to reduce tax underpayment

djohnst

I'm currently working through my first ever self assessment and have a calculated underpayment of approx £4,500 for the year 2015-2016 based on an income of £103,000.

Having done some reading it seems I could have avoided this by contributing more to my workplace pension, or paying into a personal pension such as a SIPP.

I have unused pension allowance from the year in question, can i retrospectively open a personal pension and contribute to it or has the moment passed?

Dazed_and_confused

You may get more joy by posting on the pensions annuities and retirement planning board.

The tax underpayment seems particularly high for just going over the £100,000 income limit or is there something else in the mix, company benefits not taxed via your tax code or something like that?

djohnst

Thanks for the reply - having checked the exact numbers, the underpayment is £4,189. I've never done this before but having looked at the complete calculation I can't necessarily argue with the numbers unless I'm missing something obvious.

Dazed_and_confused

What was the tax code on your P60?

Potentially you owe bits for the interest, losing some of your personal allowance and the benefits but even at 40% this would be nowhere near £4189
Tax on different bits would be,
Interest £19
Personal Allowance £377
Benefits £916

Farcasting

Hey,
On your wages alone you'd be looking at about 30k tax so my best guess is you had 10k expenses or 20k PPR (personal pension relief) in your code 15/16 and then when you've filed your return and not claimed the relief thats why you have u/p.

Farcasting

actually to answer your question tho, you cant pay into a pension retrospectively. you can however use previous years unused allowance to reduce your tax liability this year.

more info here
https://www.gov.uk/tax-on-your-private-pension/annual-allowance

djohnst

Thanks both for your replies, much appreciated.

I have dug out my records of exact income received and tax paid by month during the period along with tax codes as follows:



Other key bits of information are:

Apr 2016 - Final tax code on P60: 939T
Mar 2016 - Tax code adjustment notice - changed to 939T
Feb 2016 - Tax code adjustment notice - changed to 895T
Oct 2015 - Tax code adjustment notice - changed to 818T
Sept 2015 - Tax code adjustment notice - changed to K124
Aug 2015 - Underpayment notice, paid £76.80 by cheque

I earned £77.30 net interest from bank accounts, no investment or property income of any kind.

I have £511 of mileage relief which was submitted via form P87 in Feb 2016.

Private medical insurance from two employers in the period totaling £2,801.

Sorry to use the board as a free tax advisory service but I'd like to find I didn't really owe HMRC £4k

Dazed_and_confused

Two things,

1. How have you managed to have 100% tax deducted in November 2015? I thought employers could only deduct 50% tax at the most?

2. Your self assessment calculation shows tax from employments £26364 but your last post shows tax of £31495. Point 1 above may be relevant.

Probably best to check all your figures and then come back to us with an update

Farcasting

Dazed_and_confused wrote: »

Two things,

1. How have you managed to have 100% tax deducted in November 2015? I thought employers could only deduct 50% tax at the most?

2. Your self assessment calculation shows tax from employments £26364 but your last post shows tax of £31495. Point 1 above may be relevant.

Probably best to check all your figures and then come back to us with an update

Yeah I cant view the pic at work but yeah based on your tax codes you shouldn't owe anywhere near 4k, as above check the return and make sure the tax paid figure is correct.

djohnst

That's a good spot - copy and paste error on my part corrected here:



On point #1 I don't have a real answer - In September my code changed to K124 and I paid an inflated rate of tax (£3607) of which £2,251 was 'given back' in October.

Thoughts welcome!

Farcasting

it sounds like the refund you got in October may have been an error, possibly the employer used the wrong previous pay and tax on your tax code which generated the refund. the changes in tax code wouldn't result in such a high refund.