Tax relief of pension lump sum contribution

littleboo

Hi,

I made a one off contribution to my employers pension scheme outside of payroll. So a cheque from savings with no tax relief applied by the pensions administrator. As a higher rate tax payer, what % do I get back in tax relief from HMRC ? 40% ? I spoke to HMRC today and the amount of rebate they are paying includes some gift aid tax relief but doesn't sound enough. I don't have the workings from them yet.

Many thanks

FatherAbraham

littleboo wrote: »

Hi,

I made a one off contribution to my employers pension scheme outside of payroll. So a cheque from savings with no tax relief applied by the pensions administrator. As a higher rate tax payer, what % do I get back in tax relief from HMRC ? 40% ? I spoke to HMRC today and the amount of rebate they are paying includes some gift aid tax relief but doesn't sound enough. I don't have the workings from them yet.

Many thanks

What kind of pension arrangement have you made the lump-sum contribution to?

If it's a relief-at-source scheme, then the administrator will claim 20% relief from HMRC (that's 25% of what you paid in), and you need to claim 20% directly from HMRC, presuming that all of your pension contribs call into your 40% income bracket.

littleboo

My understanding is that on the lump sum contribution, they don't reclaim any tax on my behalf. I'll double check but when I looked at the statement I could see lump sum but no other credit outside of my normal contributions which are deducted from pay.

Dazed_and_confused

You should have a read of the thread below.

Lump sum contributions of this type (assuming no basic rate tax relief has been given at source) often seem to confuse HMRC.

But there have also been threads in the past where posters have completely misunderstood how much tax relief they will receive.

Are you able to post salary and tax deducted (P60) figures, pension contribution and details of the gift aid and any other taxable income as it should be possible to make an accurate guesstimate of the refund due.

https://forums.moneysavingexpert.com/discussion/5864919/hmrc-say-no-tax-relief-on-pension-contribution-as-im-a-20-tax-payer

littleboo

Thanks, I've just checked the wording on the "Certificate of Lump Sum Payment" which I received from the pensions scheme and sent to HMRC. It does say "NB - Tax relief has not been given at source" but its not very prominent. I'll see what their calculations say.

Dazed_and_confused

You should get a calculation called a P800.

If this refers to your basic rate being increased for pension contributions (and gift aid) that means HMRC have allowed tax relief on the basis that basic rate tax relief has been given by the pension company.

Also remember being a 40% payer doesn't mean you are necessarily going to get 40% relief. You may have contributed, say, £5000 but if you were only paying 40% tax on £500 then your relief will be much less than 40%

xylophone

Your normal contributions are deducted from your salary before tax? (Net Pay system for tax relief)


If so and you make a lump sum contribution from your taxed income (so that relief relief cannot automatically be given as above) you have to claim it from HMRC.

Has your scheme administrator given you a letter showing the date and amount of the lump sum contribution?

You would explain to HMRC that you have made a lump sum contribution from your after tax income to your pension but that because the scheme operates "net pay" no tax relief was given.

You can offer the letter in evidence if required?

littleboo

xylophone wrote: »

Your normal contributions are deducted from your salary before tax? (Net Pay system for tax relief)


If so and you make a lump sum contribution from your taxed income (so that relief relief cannot automatically be given as above) you have to claim it from HMRC.

Has your scheme administrator given you a letter showing the date and amount of the lump sum contribution?

You would explain to HMRC that you have made a lump sum contribution from your after tax income to your pension but that because the scheme operates "net pay" no tax relief was given.

You can offer the letter in evidence if required?

Hi, yes I have confirmation from the scheme and that was sent to HMRC,

xylophone

I thought I vaguely remembered some guidance from a long time ago...

I have found this

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

Your situation is analagous to that described under "Public Sector Schemes"?

littleboo

Dazed_and_confused wrote: »

You should get a calculation called a P800.

If this refers to your basic rate being increased for pension contributions (and gift aid) that means HMRC have allowed tax relief on the basis that basic rate tax relief has been given by the pension company.

Also remember being a 40% payer doesn't mean you are necessarily going to get 40% relief. You may have contributed, say, £5000 but if you were only paying 40% tax on £500 then your relief will be much less than 40%

Thanks, yes, I think then I need to see the P800. I'm comfortably in the higher rate band so expect higher rate tax relief on the full amount

Dazed_and_confused

Don't be surprised then if you are only getting a refund on the basis that basic rate relief already being allowed at source. Plus the gift aid relief.

If so you need to get HMRC to amend your calculation by removing the pension relief they erroneously allowed and replace with the correct gross, no tax relief, amount.