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Tax Allowance & Pension Contribution?

richay
Posts: 7 Forumite
For a few years ive been earning less than personal tax allowance BUT I contribute a considerable amount to works pension monthly. Because i dont pay tax (because of the allowance), friend says cant get any £ back from tax office for my contributions!. Is this sad but true?
0
Comments
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It depends on the type of pension
If you use google there are a number of articles such as this one
http://www.thisismoney.co.uk/money/pensions/article-3990296/I-don-t-pay-tax-pension-tax-relief-Steve-Webb-replies.html0 -
Is your pension contribution taken on a net pay or relief at source basis?
If relief at source, you will be receiving tax relief even though you do not pay tax.
If net pay, then you won't.
See https://www.nowpensions.com/help-centre/faqs/general-information/whats-the-difference-between-net-pay-and-relief-at-source
http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP04910 -
It is actually possible you are getting tax relief even with a net pay scheme. For example if salary this year was £12500 and no pension paid the PAYE tax due on the emergency tax code would be £200.
But if you paid 10% pension your taxable salary would be £11,250 and no tax would be paid. So a tax saving of £200.0
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