Pension tax relief

paganmanwales

I was wondering if any of you wise folk can advise me.


I made a contribution to my civil service pension, over and above the normal salary deduction. I have unused allowance from the previous years so there was no tax charge. I was expecting to receive tax relief on an amount equal to my gross salary, less any pension contribution deducted by from my pay. The tax refund I received was based on 20% the difference between my gross salary and the personal tax allowance of £11850, instead of the whole salary. Does that sound correct? I was expecting relief equal to the whole salary!

Dazed_and_confused

Your post is tricky to understand.

If the contribution was paid gross with no tax relief at source or via your payroll then it works a bit like the Personal Allowance, as a deduction reducing your taxable income.

Could you provide some figures?

I presume you are aware that you cannot get more tax back than you actually paid?

nigelbb

paganmanwales wrote: »

The tax refund I received was based on 20% the difference between my gross salary and the personal tax allowance of £11850, instead of the whole salary. Does that sound correct? I was expecting relief equal to the whole salary!

You only get tax relief if you actually paid tax. You didn't pay any tax on the first £11850.

swindiff

That is not correct, you can get tax relief on all your earning upto £40k, including what may be covered by the personal tax allowance

Dazed_and_confused

Yes, you can get relief on it all. But not if you make a gross payment you can't. Which is what it looks like the op had done.

You would have to make some, or all, of it a "relief at source" contribution.

paganmanwales

Swindiff, that is what I thought, I was expecting tax relief on an amount equal to my gross salary, less any pension contribution I have made through the payroll. Though my understanding may well be at fault.

Dazed_and_confused

I think you are getting different types of pension contribution mixed up.

Can you provide some figures and confirm exactly what type of contribution it was?

It would usually be either,

Net pay
Relief at source
Gross payment with no tax relief at all

xylophone

Have you bought additional CS pension by lump sum cheque?

https://www.civilservicepensionscheme.org.uk/members/buying-added-pensions-and-epa/what-do-i-need-to-know/

Tax relief
You will receive tax relief on contributions made through your payroll. So a contribution of, for example, £100 would have a net cost to you of £80, if you pay income tax at the standard rate (or £60 if you pay tax at the 40% rate). To receive tax relief, if you buy added pension by cheque, you will need to tell HM Revenue & Customs about your contribution and explain you did not receive any tax relief from the pension scheme in relation to the added pension purchase.

paganmanwales

Gross salary is £31478. After at source pension deduction it is £29598. The tax refund I received was
£29598 - £11850 ( personal tax allowance) = £17748 x 20% (basic tax rate) = £3549.




Does that seem correct?

Dazed_and_confused

I think the op has done all that, they just haven't realised that a gross contribution can attract different amounts of tax relief to a "relief at source" contribution.

Sadly the civil service pension scheme guidance doesn't really help explain that very well either.

Dazed_and_confused

Do you mean you paid £3,549 in tax and received a refund for £3,549?