Help with tax coding please..

Dazed_and_confused

BoGoF is spot on, you have received the tax relief for 2017:18 through your Self Assessment calculation.

If you do nothing about 2018:19 you could owe over £5k just because of this when you come to file your 2018:19 return.

This is normal practice for HMRC, just google PAYE 13150 for more information (can't copy links at moment for some reason sorry).

C_Mababejive

Thanks all,ill read later,,what is their rationale for doing this? Why dont they just leave it alone !!

I received basic rate TR via my sipp provider but not sure if or how much 40% relief i should have had or how it would be paid ..

BoGoF

C_Mababejive wrote: »

Thanks all,ill read later,,what is their rationale for doing this? Why dont they just leave it alone !!

I received basic rate TR via my sipp provider but not sure if or how much 40% relief i should have had or how it would be paid ..

Because, for most, whatever is being claimed is likely to be an ongoing thing and they want it included in their tax code and the process is automatic when a Tax Return is submitted.

Perhaps there should be a seperate box for one-off contributiins. I don't see the point of the guidance that says to enter details of one off contributions in the notes because AFAIK there is ni mechanism for this to be picked up for online submissions.

C_Mababejive

Lorian wrote: »

Bottom right page TRG7 of the tax return guidance tells you to fill in the "other information" box on page TR7 to say its a one-off payment

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/615549/SA150-2017.pdf

Are you sure you grossed up the amount you claimed too - don't want to short change yourself!

Hmmm....im just looking at the last line.... If i actually paid in to my scheme a sum of say 10,000,,what figure would i be entering in the TR for pension contribution and how is it calculated? tnx

Dazed_and_confused

It all depends on the type of pension contribution.

Probably the most common referred to on here is relief at source.

This is where your £10,000 payment gets 25% added by the pension company and become a £12,500 gross contribution in your pension fund.

The guidance notes for this part of the Self Assessment return are quite clear,

Personal contributions that had tax relief in the scheme
Box 1 Payments to registered pension schemes
operating ‘relief at source’
Under the ‘relief at source’ system, your pension
provider claims basic rate tax relief (of 20%) on
your personal contributions and adds that to your pension pot.
Put the total amount in box 1 – that is, your
personal contributions paid to the scheme, plus
the basic rate tax relief. Include any one-off
contributions you made in the year and provide the details of any one-off contributions in ‘Any other information’ on page TR 7.
Use the pension certificate or receipt you get from the administrator to fill in box 1 or work out the figure by dividing the amount you actually paid by 80 and multiplying the result by 100.
Example
Emma paid £700 into her pension scheme. She puts £875 in box 1 (£700 divided by 80 and multiplied by 100), which is her net payment plus the tax relief of £175 (£875 at 20%).

If you pay tax at 40% or 45% you should still
fill in box 1 with the amount you paid in plus
the basic rate (20%) tax relief. We’ll work out
the extra tax relief due to you over the basic rate
claimed by your pension provider.

C_Mababejive

ok,my payment was to a SIPP platform so applying the 80/100 calc ,it appears ive put the right amount on my TR

C_Mababejive

I've now had a webchat with HMRC and got them to reset the code. I was quite surprised at how well webchat worked.

Dazed_and_confused

Is there enough time for it to get to your employer/pension company before they use the previous one??

C_Mababejive

Dazed_and_confused wrote: »

Is there enough time for it to get to your employer/pension company before they use the previous one??

Sadly not.Im going to have January at the inflated TC then from Feb on the hopefully right TC.

Thankfully we are near year end to it should all become clear soon...

This may seem like a simple question but how would i know if i were entitled to any 40% TR on my 17/18 SIPP contribution and how would i work it out??

Dazed_and_confused

This may seem like a simple question but how would i know if i were entitled to any 40% TR on my 17/18 SIPP contribution and how would i work it out??

Your Self Assessment calculation would show that your basic rate band had been increased. By the gross pension contribution i.e. including the basic rate relief added by the pension company. Gift aid would be added there as well.

To understand the actual tax saving within your Self Assessment calculation then the simplest thing to do is look at your calculation without the pension contributions included. Note the tax payable or overpaid.

Then add the pension contribution to your return and look at the calculation again. Check how much less tax is due or how much bigger the refund is. That should be the additional relief your pension contribution was worth.