Pension payment arrears and tax

resilie

Slightly complicated tax and NHS pension contribution question I hope someone can help with.
Tax year 17/18 I was a basic rate tax payer as on mat leave for some time. This year I am a higher rate tax payer but split over two jobs so this job still "thinks" I am basic rate.
I was paid incorrectly for just over a year as they "forgot" to increment me on my return from mat leave. I raised it straight away but it took them 14 months to sort out, resulting in a large back payment in salary arrears this tax year. The retrospective increase in salary has also meant that I fall into a higher % band of pension contributions and have underpaid by over 3%. They have now calculated that I owe £1400 pounds in pension contributions and have asked me to either pay via BACS or fill out a salary deduction form. Very happy to pay, not an issue at all but I am confused about the tax implications.
They have stated the following for the BACS payment:
"The amount you pay back is the gross amount, which you will receive tax relief on via payroll once processed". I presume they will adjust my tax code or something... the thing I am confused about is that most of the pension arrears stem from a year when I was a basic rate tax payer, however I was paid a big chunk of money in this tax year (taxed at 40%) so should/will the 1400£ receive 20% or 40% tax relief. If it is 20% then I think my salary arrears should also be taxed in the last tax year (at basic rate) to make it fair; if it gets tax relief at 40% it is probably not worth the hassle fighting to get my pay arrears taxed in the correct tax year either (if that is even possible).
Does this make sense? None of this would have been an issue if payroll had done their job right in the first place but that's another story. Thank you for your help in advance

drumtochty

In this case due to the company poor administration you are receiving HR tax relief on your pension contributions and there is an argument to keep your mouth shut and go with the flow.


On the other hand, if you are still paying HR tax even after the extar pension tax relief and you will not in the next tax year, and it was the company fault that the increment was not paid in a timely manner, then you may have a case to charge your employer for the extra taxation due to maladministration.


Good luck with your battle.