P60 Total Pay Confusion

JoeCrystal

I just received a P60 and I am worried about the Total Pay number. Basically it is Gross Pay minus net contribution into Group Personal Pension which get a tax relief within that scheme. Is that normal? I would thought as I get a tax relief within Group Personal Pension, my Total Pay would be the same as Gross Pay? Does that make sense?

Thank you in the advance for your help!

Dox

If the provider is reclaiming basic rate tax on your behalf then yes, your P60 figures should be the same for total and gross pay.

zagfles

What?? Yes I'd expect it to be the same as gross pay for a RAS scheme. But if they are going to deduct pension conts to the RAS scheme then it should be gross pension conts, not net!

Is this a small employer who doesn't know what they're doing?

xylophone

http://www.nowpensions.com/blog/ironing-out-the-net-pay-anomaly/

It seems likely that a GPP scheme would operate Relief at Source rather than "net pay".

JoeCrystal

Thanks guys, well, it is not a small employer either unfortunately. I chased up with payroll on this and hopefully we can have this resolved. It seems HMRC Monthly Reporting are affected as far as I can see on Personal Tax Account.

JoeCrystal

Well, according to the response, it is the Net Pay Arrangement and now I double checked the figures, it goes come out right and it get deducted as gross (Now the Payroll are aware that the pension provider are adding tax relief). The main issue now is that the pension provider is adding tax relief on top of gross contribution. Which begs the question, what happened once the pension provider are made aware that they are getting gross contribution and not net contribution!? Will they sell units to pay back all tax relief claimed over the last few years?

xylophone

https://forums.moneysavingexpert.com/discussion/comment/58615849#Comment_58615849

https://forums.moneysavingexpert.com/discussion/comment/58704447#Comment_58704447

But we don't know what happened in the end.....

jennyjj

xylophone wrote: »

But we don't know what happened in the end.....

This double payment of tax relief is almost exactly the same !!!!-up that my ex employer made. I discovered it the week after I resigned and was just checking the value of my fund at same time as doing self assessment.
My deductions had come from gross pay and the scheme also claimed relief at source. It had gone on for over two years before I spotted the error and brought it forcefully to the attention of my Finance Director, HR ( pay) manager and the pension provider. I had to present them with masses of evidence before they could understand and reluctantly agreed that 'a wrong box' had been ticked within the payroll software. It was a company wide stuff- up affecting hundreds of members. Some, who had made AVC's had tax relief over-claimed to the tune of many thousands. I estimated that a total of about half a million had been incorrectly claimed back from HMRC and spread across the membership. Having finally got the company to look at the issue, they then had to bring in expensive consultants to sort it out. Took 15 months and is still not straight.
The painful resolution that they implemented was to retrospectively convert all employee contributions as though they had been employer contributions and thus 'un-claim' the tax relief which was then reimbursed to HMRC. Effectively, the scheme was converted from a group personal pension into an occupational pension scheme. It's still cocked up to an extent, but since I'm persona non- grata with the company, I'm damned if I'm going to help them further. Apparently, this issue affects many companies and schemes.

JoeCrystal

Thanks jennyjj. Very interesting to hear about your experience on this matter.

Well, unfortunately, so far, I couldn't get any updates back from either of them regarding this issue, so I decided to reduce my contribution to a minimum for now and asking for answers once in a while. That's the best I can do for now.

Naturally, I will let you know if anything changes or the consequences, for future reference in this board.

JoeCrystal

Time for an update! The pension company finally admitted that they have been incorrectly reclaiming tax relief on my and other employees' contribution and that they will sort it out. How they will do that, they didn't say, but at least something is getting done. I will update once I hear anything more about it and what they do for future reference.

JoeCrystal

Another update! After all this time, the pension company managed to take back the tax relief by converting all relevant contributions to date to the employer contributions. The result is that the fund is amended, so the tax relief never happened. I lost 10% of the fund (but then, this should not occur in the first place). The employer decided to convert the pension scheme to relief at source scheme, so this issue would not happen again. So basically the solution highlighted by jennyjj. Hopefully, this thread will be useful for any posters who may have the same problem.