Tax relief on employers pension scheme

obh469

Hi,
I have a salary sacrifice empoyers pension scheme at work. Previously I have been in the lower tax bracket and indeed my salary from work remains in that bracket. However, I have this year extra earnings that place me in the 40% income tax rate.
Is it possible to claim tax relief at the higher rate on the employers pension? If so how would I do that please?


Many thanks for any advice.

antrobus

obh469 wrote: »

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Is it possible to claim tax relief at the higher rate on the employers pension? ..
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No, because the employers pension contribution isn't taxable in the first place.

xylophone

Had you thought of contributing to a personal pension?

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

Dazed_and_confused

Is it possible to claim tax relief at the higher rate on the employers pension?

If you think about it logically then you will realise you are now effectively receiving higher rate tax relief. There is nothing you need (or can) do to to "claim" this. It's automatic due to the way salary sacrifice works.

If you weren't doing salary sacrifice you would have income of say,
Employment £40,000
Extra Earnings £25,000
Total income £65,000
Personal Allowance £11,850
Tax due on £53,150
£35,000 x 20%
£18,150 x 40%

Income with salary sacrifice
Employment £20,000
Extra earnings £25,000
Total income £45,000
Personal Allowance £11,850
Tax due on £33,150
£33,150 x 20%

So £20,000 salary sacrifice has saved you paying higher rate tax on £18,150 and basic rate tax on £1,850.

It seems as though you are only getting the benefit of basic rate tax relief because you are only a basic rate payer on your employment but the reality is that you benefit by a reduction in the higher rate tax you will be paying overall.