Worth me adding lump sums to my works pension?

Dazed_and_confused

If it helps I want to add 14k into my works pension this year before I retire. And yes I am paying 20% tax now and will do after I retire.

There have been some previous threads on here about this type of pension contribution and not everyone had received the tax refund they were expecting. Will your taxable income in the year you make the payment be at least £14k above the Personal Allowance? If not you are unlikely to pay enough tax to get the tax refund you were expecting.

As I understand it HMRC don't pay out 20% tax relief to you (like they would to a personal pension or SIPP contribution) but will re-calculate your tax taking into account the pension contribution. This will reduce your tax liability but any refund would be limited to the amount of tax you have paid.

AandP

Hi, quick update. After various conflicting conversations and letters to and from HMRC, first wanting me to fill in a tax return then saying no I don't have to then saying a written letter from myself stating that Black rock will not add any contribution at source then saying the letter has got to be from them etc etc. I now have received a letter from HMRC stating that there will be no tax refund or tax relief at all as I am only a 20% tax payer and am only able to claim tax relief on a pension contribution if I was a 40% tax payer. Is this correct as if I had chosen to have extra paid into my pension on a monthly basis from my salary it seems I would have had 20% added at source. What's worse is when I draw the added payment I made back out I will have to pay tax for the 2nd time on it thus loosing me money???? Surely this can't be right? Pls help...

Brynsam

Crossed wires - or else HRMC are plain wrong and haven't understood the situation.

Write to them again along the following lines: "On [date] I made a contribution of [£x...] to my defined contribution pension with BlackRock. I am a basic rate taxpayer. I attach supporting paperwork confirming the contribution, which was made directly by me (i.e. not thorough payroll). BlackRock have confirmed that they are not claiming tax relief on my behalf. Please advise how I obtain the relevant tax relief, given that you have already told me on [date] that I do not need to complete a tax return.'

AandP

HMRC have been sent and acknowledged proof that the amount added to my pension was from my savings account and also a letter from Black Bock stating they will not add tax relief at source. The trouble is after every conflicting statement they say I've been on the phone to them and get new instructions to follow, only then to have to wait again and again for a letter from them which then says either to do something else or now this time that I'm not entitled to tax relief at all. It seems a different person deals with my case each time and doesn't read what's gone before. Is there a supervisor or complaints process as this is now taking up not only a lot of my time but becoming more and more stressful? This started in March and I'm getting nowhere.

Dazed_and_confused

Roughly how much was the contribution paid outside of payroll on which no tax relief is being automatically added?

How much tax does your P60 show you paid in 2017:18.

You could refer HMRC to the government website on this subject,

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

Brynsam

AandP wrote: »

Is there a supervisor or complaints process as this is now taking up not only a lot of my time but becoming more and more stressful? This started in March and I'm getting nowhere.

https://www.which.co.uk/consumer-rights/advice/how-to-complain-about-poor-service-or-delays-from-hmrc

AandP

Dazed_and_confused wrote: »

Roughly how much was the contribution paid outside of payroll on which no tax relief is being automatically added?

How much tax does your P60 show you paid in 2017:18.

You could refer HMRC to the government website on this subject,

Hi, I added £14,000 from savings to my pension. Re tax etc, for year 2017-18.
Total income, £31,363. Allowances, £11,500
Total taxable income £19,863,
Income tax, £3770.
However I have seen under Private Pension Contributions:
Estimated Private Pension Contributions £0.00
Actual £17500 (no idea if this includes my £14,000 as tried to compare to last years statement which doesn't show anything similar)

"Higher rate Relief,
We have increased the amount of tax you pay at basic rate from £33,500 to £51,000 to give you higher rate relief for charitable donations or personal pension contributions."

Do you think that this means the basic rate has risen to £51,000 rather than give me any tax relief on my pension contribution? If that's the case they haven't said and as I want to retire imminently how on earth do I make use of it?

Dazed_and_confused

Where have you seen this?

However I have seen under Private Pension Contributions:
Estimated Private Pension Contributions £0.00
Actual £17500 (no idea if this includes my £14,000 as tried to compare to last years statement which doesn't show anything similar)

"Higher rate Relief,
We have increased the amount of tax you pay at basic rate from £33,500 to £51,000 to give you higher rate relief for charitable donations or personal pension contributions."

To be honest it almost sounds as though HMRC think you have paid £14,000 into a relief at source scheme. £14,000 net contribution is £17,500 when grossed up to include the basic rate tax relief.

As I'm sure you're aware if you are a basic rate payer you wouldn't usually benefit from any personal tax reduction from a relief at source payment.

AandP

Dazed_and_confused wrote: »

Where have you seen this?

To be honest it almost sounds as though HMRC think you have paid £14,000 into a relief at source scheme. £14,000 net contribution is £17,500 when grossed up to include the basic rate tax relief.

As I'm sure you're aware if you are a basic rate payer you wouldn't usually benefit from any personal tax reduction from a relief at source payment.

All these details were from a P800 refund letter (2017-2018) from HMRC giving a refund of £28 over payment. Previously HMRC asked for and received confirmation from Black rock that they would not and could not add tax relief at source on my pension account payment. This was confirmed recieved by HMRC.

Brynsam

Get TPAS to give you a hand (free) - this is right up their street: https://www.pensionsadvisoryservice.org.uk