Self assessment one off pension payments

DoctorB1

I regularly contribute into a company pension scheme and include this in my self assessment and use the /80 and x100 calculation so I can claim the additional tax relief being a 40% tax payer. This last tax year I did a one off payment from my savings account (ie taxed earnings) into the same scheme directly with the pension provider. I am struggling for guidance on what to include in the 'paying into registered pension schemes and overseas pension schemes' section in the online self assessment.

For the one off payment I believe I should enter into 'payment to your employers scheme which were not deducted from your pay before tax'?

Second question is what value do I include should it be the saving monies I paid into pension scheme in this case £26000, the value inclusive of 20% from pension provider ie £32500 or some other value?

Any help appreciated...

NordicNoir

DoctorB1 wrote: »

I regularly contribute into a company pension scheme and include this in my self assessment and use the /80 and x100 calculation so I can claim the additional tax relief being a 40% tax payer. This last tax year I did a one off payment from my savings account (ie taxed earnings) into the same scheme directly with the pension provider. I am struggling for guidance on what to include in the 'paying into registered pension schemes and overseas pension schemes' section in the online self assessment.

For the one off payment I believe I should enter into 'payment to your employers scheme which were not deducted from your pay before tax'?

Second question is what value do I include should it be the saving monies I paid into pension scheme in this case £26000, the value inclusive of 20% from pension provider ie £32500 or some other value?

Any help appreciated...

No, you should use box 1 and £32,500.

Box 3 would get you tax relief at 40% or higher, but your pension provider is already giving you relief at 20%. Box 3 is used for salary sacrifice and net pay schemes where the contribution has been made outside of the payroll - which would be quite rare.

PS. I am assuming that you are aware of the annual allowance, carry forward rules and tapering of the annual allowance. I mention this only as your contribution is so high.

DoctorB1

Thanks that makes sense as I got the 20% relief by pension provider.
Sort of understand rules...I think....I will be using carry forward to cover additional pension contributions for last year, and I believe I am under the tapering threshold income.
Thanks again!

NordicNoir

DoctorB1 wrote: »

Thanks that makes sense as I got the 20% relief by pension provider.
Sort of understand rules...I think....I will be using carry forward to cover additional pension contributions for last year, and I believe I am under the tapering threshold income.
Thanks again!

You are welcome - sounds like you have everything under control!

dori2o

One thing to consider is whether or not you are already getting all the relief that is due on your pension contributions made via your salary.

It's quite unusual (but not impossible) nowadays for further tax relief to be due on company pension schemes. This is because in most cases the pension deduction is taken from an employees GROSS pay, I.e. before any tax has been deducted from the money being contributed.

Tax is then calculated on the 'taxable gross' amount, I.e. Gross Pay - Contribution = taxable gross.

In these cases, because no tax has been deducted at 40%/45% on the amount of salary contributed to the pension scheme, no further relief is due.

You should check whether or not tax relief has already been given at the point the contribution is taken from salary by checking your P60.

If the relief HAS already been given, then on your P60 you will see that your Gross Pay, and Taxable Gross Pay will differ by the same amount as the 'net' contributions taken from your salary.

If no relief has been given then the Gross and Taxable Gross on the P60 will be the same amount.

Many people get caught out on this issue.

If the relief is given directly through your salary, and you then show the same contributions on the tax return, then you are getting the relief twice, which is clearly wrong.

If you are getting the relief through your salary then you should only show any contributions made separately from your salary, I.e from savings etc.

If anyone finds that they have claimed tax relief on their tax return in error as relief is given via their salary, then they should really discuss with HMRC regarding how to correct the error.

[Deleted User]

Interesting dori20. Of course, the other side of the story is where taxpayers declare their gross earnings before pension contributions as per their March payslip and not what was on their P60 which, as you know, is after pension contributions. My sister-in-law's husband did this for four consecutive years (luckily only four!) resulting in underpayments each year. While this was entirely his fault it does make one wonder why, at no stage, did HMRC perform any checks to to verify that the earnings delared on the return matched up with the earnings provided by the employer which in this case, was the Health Service.

dori2o

[Deleted User] wrote:

Interesting dori20. Of course, the other side of the story is where taxpayers declare their gross earnings before pension contributions as per their March payslip and not what was on their P60 which, as you know, is after pension contributions. My sister-in-law's husband did this for four consecutive years (luckily only four!) resulting in underpayments each year. While this was entirely his fault it does make one wonder why, at no stage, did HMRC perform any checks to to verify that the earnings delared on the return matched up with the earnings provided by the employer which in this case, was the Health Service.

Even the payslip should show both gross and taxable pay. It's not only restricted to the P60.

It is also the case now that PAYE income and tax deducted is automatically input onto the tax return where the taxpayer submits online using HMRC's own online software. The information is taken directly from what the employer submits via RTI (real time information) which is sent to HMRC everytime a salary payment is made by an employer.

The taxpayer has the ability to override these figures if necessary.

Again these figures will show the Taxable income not the gross.

Not all tax returns are checked. It would be impossible to check every return given how many are submitted. However, despite the changes and increased use of digital information, the one thing that has not, and is unlikely to change, is the fact that the responsibility to pay the correct amount of tax, to notify HMRC of other taxable income, and to check calculations and notify errors lies with each individual.

[Deleted User]

Yes - the system is what it is! You are probably too young to remember A,N,Z-ing but may be young enough to remember when there were enough staff to be able to do it.

I completely agree with your sentiment - I just think that something is wrong when a self-assessment return overrides all previous information received by HMRC through payroll. Your second paragraph is interesting and informative - a significant improvement! HMRC can staff can only perform according to resources which, ironically since computerisation in the mid 80's, have continuously deteriorated.