40% tax payer only getting 20% tax relief

penwise

Thanks for the replies.

It is a company pension but unfortunately she does have to claim the tax back.

It's good to know she can at least claim 4 years back - she has no other income so hopefully this will be straightforward to do and she can do it over the phone without having to fill forms.

I suppose any information HMRC need in relation to all this can be got by simply asking the pension provider?

xylophone

http://support.autoenrolment.co.uk/contribution-and-payroll/info/tax-relief-net-pay-relief-at-source

An explanation of "net pay" and "relief at source".

mgdavid

penwise wrote: »

.......

I suppose any information HMRC need in relation to all this can be got by simply [STRIKE]asking the pension provider?[/STRIKE] looking at their payslips and P60s.

fixed !

AlanP_2

xylophone wrote: »

http://support.autoenrolment.co.uk/contribution-and-payroll/info/tax-relief-net-pay-relief-at-source

An explanation of "net pay" and "relief at source".

I understand that the LGPS AVC scheme runs as a "net pay" system but can someone please confirm?

System

martinsurrey wrote: »

that is wrong,

If it is a salary sacrifice scheme, then nothing needs to be done, as it is all contributed before tax comes into play.

however a normal EE pension contribution for a DC pension through an employer, you will pay £80 of net pay for every £100 you want to contribute to your pension scheme, you will then have to claim back the higher rate tax, you are right that its a simple call to HMRC, but you must call them a few times per year, once per year to let them know the final amount you contributed in the prior tax year, and once to let them know the estimate of the current years contributions.

Your employer plays zero part in this and it is not automatic.

For an employer scheme the pension contributions are deducted from gross salary to leave taxable income so you automatically get tax relief at 40% (regardless of salary sacrifice, which is a way to avoid NI).

xylophone

I understand that the LGPS AVC scheme runs as a "net pay" system but can someone please confirm?

See Page 9.


https://www.pru.co.uk/pdf/LAVK0846.pdf

What are the tax advantages of investing in the Local Government AVC Scheme?

and check with your administrator.

zagfles

martinsurrey wrote: »

that is wrong,

If it is a salary sacrifice scheme, then nothing needs to be done, as it is all contributed before tax comes into play.

however a normal EE pension contribution for a DC pension through an employer, you will pay £80 of net pay for every £100 you want to contribute to your pension scheme, you will then have to claim back the higher rate tax, you are right that its a simple call to HMRC, but you must call them a few times per year, once per year to let them know the final amount you contributed in the prior tax year, and once to let them know the estimate of the current years contributions.

Your employer plays zero part in this and it is not automatic.

That is not the "normal" way it's done. Most employers use a "net pay" arrangement which (confusingly) means pension conts are deducted from gross pay before tax is applied. So full tax relief is given in payroll.

There are some employers who use RAS schemes where pension conts are deducted from after-tax pay and the scheme claims 20% relief from HMRC, for these full relief is not given for higher rate taxpayers and they'll need to claim from HMRC. But this is not the "normal" way it's done.

The OP should check payslips, pension statements or the scheme booklet to find out which.

penwise

She had always thought this was automatic but she has now seen documentation relating to the scheme and it says if a higher rate tax payer you will need to claim the extra tax relief.