Redundancy & pension payment

amc1

The reason for the delay was that when I received £115k in my pay packet, it had been taxed so I needed to find the money from elsewhere to maximise my payment into my pension - if that makes sense.

Dazed_and_confused

Seems somewhat more complicated the more we learn!

If you only have pension income and no earnings this year then I'm not sure you can get any tax relief on the payment.

There are one or two more knowledgeable than me in the pension tax relief department who will hopefully come along and help

xylophone

but if your only income this year is £22k then you won't pay any higher rate tax so there is nothing to come back from HMRC.

The £22,000 mentioned by the OP appears to be pension income for 2017.

Pension income is not "relevant earnings" for purposes of pension tax relief.

http://www.pruadviser.co.uk/content/knowledge/technical-centre/tax_relief_members_contributions/

Linton

So sadly it looks like you wont get any tax relief whatsoever from the £115K payment into your pension but will be charged a second bite of tax when you withdraw it beyond your tax allowance. Any chance of the pension scheme undoing the payment? That would be better than where you are now.

xylophone

The basic point seems to be that the OP needed to make the pension payment/use carry forward in the tax year 2016-17?

http://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/member-contributions-tax-relief-and-annual-allowance/

amc1

Yes. So if you are made redundant at the end of the financial year, then unless you move extremely quickly, the pension option is not really available to you.

squirrelpie

"After advice from my company, my pension provider ..." Was any of this advice in writing and if so what exactly did they say?

bigadaj

The OP will have paid an effective rate of 60% on the portion abive £100k as well.

atush

It seems a shame you waited to find extra money, when you could have slammed as much as you had into the pension by April 5th.

I have done it once by DC online on the 5th itself.

amc1

Yes, just looked back. What a mess !

I was made redundant on the 16th March 2017. I have an e-mail that effectively says my redundancy would be paid on the 15th April but was then paid on the 29th March.

I emailed my pension provider on 27th March asking for the maximum amount I could pay into the pension but they didn't reply with that figure until 5th April.

In that e-mail they said "you will be responsible for claiming back any tax back from HMRC and we will write to you with confirmation when the payment has been invested, which you can use to reclaim any tax liability on this payment."

I was only allowed to pay by CHAPS transfer.