Teachers' Pension - Additional Pension

Sussex_Mike

Hello,
I am a member of the Teachers' Pension scheme. I recently paid £20k to buy Additional Pension. I received a letter from the scheme confirming that this is a gross payment. I believe that I should be eligible for tax relief on this amount. I claimed the tax relief from HMRC in writing and included the letter from the scheme. HMRC have replied stating that as I am not a higher rate tax payer I am not eligible for any relief. I phoned them and they said they need proof from TPS of any net payment. I pointed out that that isn't relevant as it is a final salary scheme. They then said that they needed a letter from TPS confirming that it is a final salary scheme. Getting any sort of communication out of TPS currently is almost impossible. Surely that is a well-established fact that HMRC should be aware of. Am I correct in thinking that I should be able to claim tax relief? Where do I go from here?
Many thanks
Mike

jem16

Yes you are entitled to tax relief. I had no bother claiming it back 3 years ago but it was done through my tax return.

You need to ensure that HMRC understand that this is a gross payment to a Defined Benefit scheme and that you are not claiming higher rate tax relief.

The TPS has given you all that should be required. Perhaps write to HMRC rather than phone and take it higher to complaint level if necessary.

Dazed_and_confused

This has cropped up before on the Cutting Tax board with similar confusion so is maybe an unusual situation for HMRC?

Anyhow, their own guidance does mention this, see Personal Pension and Concessional relief sections,
https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye130025#IDA0H2PE

The previous occasion this was discussed on MSE the poster had made quite a significant and very costly error in their assumptions of the tax relief which will be due.

Roughly what is the amount you expect your next P60 to show as your taxable for this tax year and how much tax refund are you expecting?

Sussex_Mike

Very many thanks for your swift response. I did write initially. When they replied saying I wasn't eligible I decided to phone. It had occurred to me that a tax return might be a better option, so perhaps that's where I will go next. Just have to be patient!

Mike

xylophone

http://www.supporttalk.co.uk/wp-content/uploads/2015/11/Additional-pension-factsheet-v11-0615.pdf

You’ll normally receive tax relief through the
PAYE system if you pay by instalments. You’ll
need to speak to your Inspector of Taxes about
tax relief if you make a lump sum payment.

https://forums.moneysavingexpert.com/discussion/3260494

See post 2.

http://webarchive.nationalarchives.gov.uk/20110617043205/http://www.hmrc.gov.uk///pensionschemes/faqs/taxrel.htm

Dazed_and_confused

xylophone

Does the 15% limit referred to in the national archives link still apply or has it been abolished and replaced with the usual earnings limit?

jem16

Sussex_Mike wrote: »

Very many thanks for your swift response. I did write initially. When they replied saying I wasn't eligible I decided to phone. It had occurred to me that a tax return might be a better option, so perhaps that's where I will go next. Just have to be patient!

Mike

Do you already complete a tax return? If you do then that's the best option as I wasn't even asked for proof.

If you don't then I would write back to HMRC and tell them that you have given them all the proof that's required for a lump sum payment into a Defined Benefit scheme. You could include the relevant part from xylophones second link.

hugheskevi

This issue keep recurring with HMRC. In case it helps, here is some text I used a few years back when in the same position. The main point to keep hammering home is that the scheme is neither net pay nor relief-at-source. Calling HMRC about this issue is at best a matter of luck and at worst pointless, their contact centre staff don't understand anything beyond the bare basics, whereas post will get filtered to appropriately skilled teams. Rather embarrassingly, HMRC's own pension scheme operates in this way

CODING NOTICE AMENDMENT FOR 2014/15

Dear Sir/Madam,

Tax reference: (insert)
National Insurance number: (insert)

I am writing to amend my Tax Coding Notices for 2014/15.

My estimated taxable income for 2014/15 is £(insert) and I plan to make a pension contribution of £(insert) to a pension scheme which does not operate either relief at source or net pay arrangement and hence all tax relief has to be claimed from HMRC.

As the pension scheme does not operate relief at source on this type of payment, it has frequently been dealt with incorrectly by HMRC in previous years.

I believe you enter this type of pension contribution into your system as a contribution to a Retirement Annuity Contract as although the pension scheme is not a Retirement Annuity Contract, the tax treatment is the same.

This will result in a revised Tax Coding notice of approximately (insert). If instead it results in a Tax Coding notice of approximately (insert) then it has been incorrectly entered into your system as a personal pension contribution to a scheme operating relief at source.

chucknorris

Dazed_and_confused wrote: »

xylophone

Does the 15% limit referred to in the national archives link still apply or has it been abolished and replaced with the usual earnings limit?

I'd like to know about this too, I've not heard of a 15% limit! Although so far I have only bought additional pension taken monthly from my salary, rather than paying with a lump sum. But when I join the 2015 scheme in 2020, I can once again buy additional pension, but to maximise the amount that I can buy, I will have to pay by lump sum in 2 of the tax years before I reach state pension age. I would like to know if I be limited to 15% of my salary? In which case I would be better off paying monthly from my salary.

xylophone

Does the 15% limit referred to in the national archives link still apply or has it been abolished and replaced with the usual earnings limit?

I have looked at pension tax relief for the 2010-11 year to see if a reference is made to this limit and cannot find anything.

http://www.inspired.uk.com/pdf/Tax%20Rates%20and%20Allowances%202010-11.pdf

This (NHS Scheme) thread may be of interest.

https://forums.moneysavingexpert.com/discussion/4043989

xylophone

Rather embarrassingly, HMRC's own pension scheme operates in this way

Indeed!

The HMRC employees are members of the Civil Service Scheme and can buy AP in that scheme.

See http://www.civilservicepensionscheme.org.uk/media/209937/epn-479-annex-a-buying-added-pension-and-epa.pdf

Tax relief

You will receive tax relief on contributions made through payroll. So a contribution of, say, £100 would have a net
cost to you of £80, if you pay income tax at the standard rate (or £60 if you pay tax at the 40% rate).

To get tax relief, if you buy added pension by cheque, you will need to tell HM Revenue & Customs about your contribution and explain you did not receive any tax relief from the pension scheme in relation to the added pension purchase.