Employer or Employee Contribution

Lancelot6

Hi,

I am being made redundant and my payout will include redundancy plus a fairly large payout for loss of company health insurance.

I intend to pay as much as possible into my pension, but my redundancy and the payout together will be way more than my pension allowance + carry forward from the previous 3 years so I will completely fill my allowances (assuming I can work them out).

Obviously I don't want to pay more than my allowance + carry forward into my pension as this will have tax consequences.

My problem is that if the health payment is classed as an employee contribution, then it gains tax relief, whereas if it is classed as an employer contribution it won't. Is that the right way round?

Obviously I cannot know how much to pay into my pension without knowing what type of contribution it will be classed as as they will be different sums.

Does anyone have any idea which it would be classed as?

Thanks,

Lancelot6

xylophone

You are expecting a compensation payment for loss of a benefit, over an above other elements of your redundancy package?

The employer is not making a payment to the pension in this respect?

https://www.smithcooper.co.uk/news-insights/significant-changes-to-the-termination-payment-rules-from-6-april-2018/

Also, any payments made to compensate the employee for the loss of a benefit, for example a cash payment to cover the early return of a company car, or the loss of private health insurance, will also be liable to PAYE tax and Class 1 NIC deductions.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim13530

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100


Check with HMRC.

Lancelot6

Thanks for very fast reply. So it sounds as though it should go through as an employee contribution.

I have already asked a financial advisor the question, and they were unsure, but your answer is what I had suspected at first, so it would essentially be classed as relevant earnings.

I do intend to contact the pensions advisory service, and HMRC, I would just prefer to know before hand. It just seems to me that my employer should to tell me what they intend to put it through as, I don't want to ask HMRC and be told one thing, only to have my employer do another.

The only good thing is that your first link appears to say that , if my employer puts it through wrongly, they won't come after me, they will go after the employer (I hope).