Claiming tax relief on sipps?

C_Mababejive

NoMore wrote: »

You will be owed approximately 20% tax relief on 15k (so 3k), from your rough figures. As thats the amount over the higher rate tax band you paid tax on. (45k last year, so 60k-45k=15k).

Just call HRMC and tell them your income for 2017/2018, the gross amount you credited to pension and they will sort a refund for you.

Thanks all,so i have to actively tell them, it just doesnt automatically flow from a filed tax return for that year??

Regarding the on line SA filing,,can you play around with it on line before finally filing it or does it record in the background what figures you might insert/change ?

How do they pay me the extra tax relief from the 40% band? cheque? tax code adjustment ??

Dazed_and_confused

No they won't. The op has another thread about completing his 2017:18 tax return so HMRC won't give any tax relief for that year, it has to be included on the return.

Dazed_and_confused

You can play about with your return as many times as you like before actually sending it to HMRC.

You do not get a specific pension relief, the pension payment merely increases the amount of basic rate tax you can pay (which will reduce any higher rate tax due). This is effectively part of your self assessment calculation so if say without the pension payment you would owe £1,000 but with it HMRC owe you £1,500 then you can get a refund of £1,500 and don't have the £1,000 bill to pay so are £2,500 (as an example) better off overall.

Self assessment refunds are normally paid by bank transfer not cheque if you fill in your return correctly.

HMRC never give tax relief for pension payment in one year by altering the tax code of a later year.

C_Mababejive

Thanks all for your input. I'll have a good read and try and get a better understanding. As with most things i guess it will become a lot clearer/easier once ive been through this loop a few times.

grt1

I hope the OP doesn't mind me tagging onto the thread, but I have a similar question which perhaps someone else might have encountered before.

As I understand it, you are supposed to enter both your contributions and the 20% tax relief you get from the SIPP company which they claim back for you automatically.

What happens however when there is a significant delay between the deposit and the arrival of the extra 20% which then spans over 2 tax years? Are you supposed to enter just your deposit as that is all that has effectively arrived or the extra 20% as well?

I only put down what I had deposited in my previous tax return for 2016/17 so now I come to do 2017/18, I don't know if I should put down the 20% tax relief I received from the previous year's deposit last year as well or even where it would go?

londoninvestor

grt1 wrote: »

What happens however when there is a significant delay between the deposit and the arrival of the extra 20% which then spans over 2 tax years? Are you supposed to enter just your deposit as that is all that has effectively arrived or the extra 20% as well?

Add on the extra 20% as well. This isn't spelled out all that clearly IMO, but it's implicit in the Self-Assessment notes. See page 8, sect 1 here. This directs you to calculate the amount by either (1) using the "receipt" from your provider. With my HL SIPP, I always get something that clearly shows total contribution per year, including the tax relief associated with it, regardless of when I got the releif; or (2) multiplying your cash contribution by 100/80, with no reference to when the tax relief was actually received.

grt1 wrote: »

I only put down what I had deposited in my previous tax return for 2016/17 so now I come to do 2017/18, I don't know if I should put down the 20% tax relief I received from the previous year's deposit last year as well or even where it would go?

Worth a call to HMRC to check. But it's not too late to amend your 2016/17 return online (you have until 31st Jan 2019 to do so). So I suspect they'll tell you to do that, and file for 2017/18 in the way we've described, i.e. including the 20% even if it was actually received after 5th April.

Marcon

In reality most pension providers add the 20% to your pot pretty much immediately, using their cashflow to do so, pending receipt of funds from HMRC.

grt1

Thanks - I'll change the previous year's return. I'm with iWeb and it seems to take weeks and weeks for the 20% to hit.

triplea35

grt1 wrote: »

Thanks - I'll change the previous year's return. I'm with iWeb and it seems to take weeks and weeks for the 20% to hit.

If a SIPP contribution is made before the 5th of any given month then tax relief is paid by HMRC around the 22nd of following month. ie contribution before 5th Oct will get tax relief paid around 22nd Nov.

Both SIPP providers my family use credit the SIPP like this.

C_Mababejive

sorry,when entering contributions to a SIPP on a tax return do i enter the money i actually paid in or do i enter my contribution plus the tax relief received also?
tnx