Reclaiming 40% tax as pension relief.

Confused765

Dear All,

In the year 2015/16 I was lucky enough to pay some 40% tax, and to a lesser extent in 2016/17. I have since taken a more secure but lower paid job and now only pay 20% tax.

I did not make any private pension contributions in these years as I was saving for a deposit on a house.

It was my understanding that I can pay into a private pension after and claw back this 40% tax from 2015/16, within 4 years. Alas! I tested this theory last April and received a rebate without any fuss.

This April I informed HMRC that I had paid a further £1000 into my pension, received £250 relief at source already and politely asked for another £250 rebate from my 2015-16 contributions.

I received just £92 from HMRC, many letters have been exchanged and now they tell me that on closer inspection I owe them £50 :mad: :mad:

Now I am starting to doubt my own sanity and I can't find the information which made me believe what I wrote in paragraph 3.

Could anybody please confirm that I am correct before I write my next letter? or kindly explain to me that I'm a very stupid person and that I should leave the nice people at HMRC alone.

Linton

You cannot pay into a pension for past years. Any pension contribution you make only counts against tax in the current year.


So sorry, you are wrong. I dont know why they gave you £92 and why they only think you owe them £50.

Confused765

"So sorry, you are wrong. I dont know why they gave you £92 and why they only think you owe them £50."

I've got no idea why they gave me £175 last year either then! I just panicked and checked the letter I sent them, I explicitly stated that I paid into pension in 2016-17 but wanted rebate from 2015-16, so I wasn't trying to fiddle them!

BoGoF

As above, your understanding is very much wrong. You only get tax relief for pension contributions in the year you pay them.

dunstonh

If you told them you paid a pension in 2016/17, then the potential for higher rate on some of the money existed and that may explain the rebate. However, once they see that you didnt actually pay into the pension in 16/17 they would look to correct this. Or maybe you already paid into a pension and were due a bit of higher rate relief on a bit of the slice.

Effectively, you have told them something that didnt happen.

To utilise carry forward, you have to contribute over £40,000 into a pension in this tax year. You can then access unused allowances from the previous 3 years. However, it is treated as being paid in the current tax year.

AnotherJoe

It was my understanding that I can pay into a private pension after and claw back this 40% tax from 2015/16, within 4 years. Alas!

As said, your understanding is wrong, but not at all uncommon, i had that same misconception until a few years ago. You can only claim back for past years if you are earning more than £40k and are putting away all £40k and more. Then, effectively whats above the £40k can be the claim back, but only up to what you earned. You cannot claim back say £60k if you only earned £50k.


So, you are out of luck.