Net pay or Relief at source?

Don't_Know_Joe

In 2016/17, my gross salary put me in the higher rate taxpayer (40%) bracket. My workplace pension takes my monthly pension contribution £X from my monthly wage. I can see that as a deduction on my payslip.
That same pension contribution value £X appears on my annual pension statement. Alongside it appears the Basic tax relief £Y claimed by the pension provider.
As a higher rate taxpayer, am I entitled to claim back any additional tax relief related to my pension contributions?
I rang HMRC and their advisor said I was not entitled to. She was looking at a copy of my payslip and she said something about it being "net pay", and therefore there was no further tax relief despite me being a higher rate taxpayer.
However, on HMRC's website it says under Net Pay, "The amount you’ll see on your payslip is your contribution plus the tax relief"
But this is not the case as my payslip only shows my contribution £X, and does not show the Basic Tax relief £Y element shown on my annual pension statement. That led me to believe it was "relief at source" which HMRC's website says....."With ‘relief at source’, the amount you see on your payslip is only your contributions, not the tax relief. You may be able to claim money back if you pay higher or additional rate Income Tax"
However, the HMRC lady was adamant no further tax relief was applicable. Have I misinterpreted what it says on HMRC's wesbite?

alewin

You are confusing yourself.

The pension contributions from your pay slip are taken before any tax is deducted, so you are already getting the full tax relief. How can you claim extra tax relief for contributions that have not been taxed?

If you earned £1000 over the 40% bracket which all went into your Workplace Pension then you are getting the full £1000 into your pension. If not put into a Workplace Pension then after tax you would take home just £600 of it in your payslip.

BoGoF

Can you post the figures from your payslip?

TcpnT

That same pension contribution value £X appears on my annual pension statement. Alongside it appears the Basic tax relief £Y claimed by the pension provider.

So is the total amount actually credited to your pension fund £X or is it £X+£Y ? It maybe that they just include the figure Y to show how much tax relief you have already received. If you are actually credited
£X+£Y then this would suggest the your scheme operates a relief at source system with your contribution being deducted from post tax net earnings. In this case you would be able to claim higher rate relief via your tax return.

See: http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0491

It could of course be the case that either your employer or the pension scheme are treating your contributions incorrectly. Best to clarify this because in the worst case the pension scheme could have been incorrectly crediting you with tax relief that was not actually due.

Don't_Know_Joe

@ BoGoF,,,,the relevant rounded figures from my payslip:-
Under "Deductions", there is a line for Tax Paid. Under that, is a line for NI contributions. And under that, it says Pension contribution.... £156

On my pension provider's statement of contributions it says for each month,
Amount excluding income tax relief.....£156
Basic Tax relief.....£39
Total......£195

What spurred me to ring HMRC was someone else posted in a staff forum that she was also a higher rate taxpayer. She had rung HMRC about the same issue and HMRC told her they would be processing a tax refund. That got me wondering.

TcpnT

On my pension provider's statement of contributions it says for each month,
Amount excluding income tax relief.....£156
Basic Tax relief.....£39
Total......£195

This confirms that the scheme is treating it as a relief at source arrangement - in which case you would
be eligible to claim higher rate relief from HMRC.

But as I said in my previous post I would want to be absolutely sure that both employer and scheme were treating the deductions correctly. it is not clear to me from your payslip numbers whether the pension contribution is being deducted from gross or net pay. Easiest way would be to speak to someone in payroll and just ask them to explain the payslip deduction to you

rca779

I have the same question - below is a copy of my salary slip showing I am paying £300 per month into my company pension. In my pension statement I can see that I get an extra £75 (25% tax relief).


Link: https://ibb.co/mH30ww


So am I getting the extra 15% relief in income tax or do I need to claim the extra 15% on my pension contributions?

BoGoF

rca - you need to claim the additional 20% relief from HMRC. You have only received 20% relief at source not 25%. You have made a common mistake but the way to look at it is your gross contribution is £375 so £75 tax relief is 20%.

rca779

BoGoF wrote: »

rca - you need to claim the additional 20% relief from HMRC. You have only received 20% relief at source not 25%. You have made a common mistake but the way to look at it is your gross contribution is £375 so £75 tax relief is 20%.

Surely £75 is 25% of £300?

TcpnT

I have the same question - below is a copy of my salary slip showing I am paying £300 per month into my company pension. In my pension statement I can see that I get an extra £75 (25% tax relief).

So am I getting the extra 15% relief in income tax or do I need to claim the extra 15% on my pension contributions?

Yes your payslip shows that your pension contribution is being deducted from post tax net pay. This means you do need to claim higher rate relief from HMRC

BoGoF

rca779 wrote: »

Surely £75 is 25% of £300?

Arithmetically it is but that's not how pension relief works - if you only want another 15% relief then fair enough.