Personal Pension Tax relief

Lucys_Da

I am hoping some kind soul will help me with a query I have about my personal pension payments and subsequent tax relief as to be honest whilst I consider myself fairly sharp the whole tax arena is still a murky world!!


Ok I basically want to know based on payments and details from my PAYE Income Tax Estimator am I getting the correct amount of tax relief at source or do I need to claim the additional 20% back.


So the basic facts on the matter are as follows:


- I am a higher rate tax payer


- My pension contributions that are showing as coming off on my wage slip are £203.67


- In my pension fund the monthly amount that is lodged into my account from me is showing as £250.41


- According to my detailed PAYE Income tax estimator for 2018/19 it states the following: You made personal pension payments of £3,220 during this tax year which give you tax-relief and an Income Tax saving of £644. (the -644 is shown as a personal Pension Payment as a deduction and saving taken away from the income tax I pay on the detailed tax estimator)


So, I am just trying to align these figures and ensure that I am getting the additional 20% tax relief at source, or whether I should be claiming that back via self assessment. I have previously contacted HMRC, and they have informed me that they have already taken everything into account and I don't need to claim the additional 20% back as they do this for me already apparently...


I hope this is enough info and I appreciate people taking the time to read and hopefully help me out on this

Marcon

Payments to your personal pension are made out of net (i.e. post-tax) pay.

The pension provider (not HMRC) reclaims basic rate tax on your behalf and adds that to your personal pension 'pot'.

Higher rate tax relief is claimed via your self assessment tax return and is credited to you, not to your pension.

xylophone

What you need to establish is whether your pension scheme operates "net pay" or "relief at source".

You say that your pension contribution is taken from your salary after tax is deducted - if so, then your scheme is operating "relief at source"- this will give you only basic rate tax relief and you would need to claim additional relief through HMRC.

If your scheme were operating "net pay", your pension contributions would be taken before tax was deducted and therefore you would have received all the tax relief to which you were entitled and would not have to claim additional relief through HMRC.

See https://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0673

Lucys_Da

In my personal pension information section of my pension it says the following:


We will claim back basic rate tax relief from HMRC and invest it into your plan. The amount displayed includes any tax relief added.


So my wage slip has £203.67 being taken from my salary and the personal pension payment as shown in my pension statement every month is £250.41.


I was wondering, based on the information I provided as stated on my PAYE income tax calculator in regards to the tax relief and income tax saving as shown does that indicate whether all the tax relief has been applied.

xylophone

Read the posts above again.

We will claim back basic rate tax relief from HMRC

indicates that you are a "relief at source" arrangement.

This gives basic rate tax relief.



You say that you are a higher rate tax payer.

Therefore you will need to claim any additional relief you may be due from HMRC. Have you already done this through Self Assessment?

See https://www.aegon.co.uk/support/faq/pension-technical/claiming-tax-relief-pp-faq.html