Pension contributions and tax return - confused!

Alan_Cross

My wife is in semi-retirement - only doing voluntary work - but we are continuing to pay into her Standard Life stakeholder pension up until her chosen retirement age next year..


I'm confused about section 9.1 of the short tax return which she has to submit. I remember several years ago being told by an HMRC helpline that this section was only really for higher rate taxpayers.


Does she actually have to fill it in, would anyone be able to tell me?

Dox

Yes. If you read the accompanying notes, you'll see she does:

Under the ‘relief at source’ scheme, your pension provider claims basic rate (20%) tax relief on your personal contributions and adds that to your pension pot. Put the total amount in box 9.1 – 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. Use the pension certificate or receipt you get from the administrator to fill in box 9.1, or work out the figure by dividing the amount you paid by 80 and multiplying the result by 100.

For notes in full see https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/506435/sa211-2016.pdf

If she has no earned income, make sure the pension provider knows that - they will only be able to claim basic rate relief on the first £2,880 of contributions.

Alan_Cross

So the purpose of her doing this is what exactly? A check by HMRC that she isn't getting too much tax relief?


I'm still a bit confused as to why they actually need the figures declared...

zagfles

If she does a tax return, then yes you have to fill it in accurately. It won't make any difference for contributions to a RAS scheme unless she's a higher rate taxpayer, but if she does a tax return she needs to get it right, you can't just ignore stuff because you think it makes no difference.

But why does she do a tax return? Usually just high earners, the self employed and those with unusual forms of income do tax returns. Or people who want to claim ceratin reliefs.

I presume you're aware of the tax relief limit, ie she can't get tax relief on more than 100% of earnings or £3600 gross (ie 80% or earnings or £2880 net). Is she paying more than that?

Alan_Cross

zagfles wrote: »

If she does a tax return, then yes you have to fill it in accurately. It won't make any difference for contributions to a RAS scheme unless she's a higher rate taxpayer, but if she does a tax return she needs to get it right, you can't just ignore stuff because you think it makes no difference.

But why does she do a tax return? Usually just high earners, the self employed and those with unusual forms of income do tax returns. Or people who want to claim ceratin reliefs.

I presume you're aware of the tax relief limit, ie she can't get tax relief on more than 100% of earnings or £3600 gross (ie 80% or earnings or £2880 net). Is she paying more than that?

Highlight 1: agreed... but intelligent people usually like to know why they're being asked to give up their valuable time, especially when, frankly, the information asked for should really already be known by those asking...



Highlight 2: because of income from property


Highlight 3: no

Marcon

Alan_Cross wrote: »

So the purpose of her doing this is what exactly? A check by HMRC that she isn't getting too much tax relief?


I'm still a bit confused as to why they actually need the figures declared...

Precisely that.

Why? Because there are plenty of people around (including intelligent ones) who have no idea that there is a limit to the tax relief they can claim if they are contributing to a pension scheme without any earned income, or erroneously believe that things like rental income, dividend payments etc can be counted as earned income.

Dox

Marcon wrote: »

Precisely that.

Why? Because there are plenty of people around (including intelligent ones) who have no idea that there is a limit to the tax relief they can claim if they are contributing to a pension scheme without any earned income, or erroneously believe that things like rental income, dividend payments etc can be counted as earned income.

...and don't give their pension provider full, accurate information to ensure that only the right amount of tax relief is claimed. HMRC would be hard pressed to pick up these sort of errors, so entirely reasonable that someone's valuable time should be spent ensuring that the rest of us, as kindly taxpayers, don't fund too much tax relief for other people!