Railway Pension Scheme Website - BRASS Payments/Tax

SJG1

Hello all,
A quick summary.
Currently in the Railway Pension Scheme and pay additional contributions into the AVC section called BRASS. Previously whenever I made any changes to my contributions I filled out a form from the pension website and sent it to our payroll dept which was nice and easy.
On the new updated website there is an option to make a one off payment by paying the money in direct to the RPS which I did fully expecting them to send the details to HMRC for a 20% uplift. I know I should have queried this before I sent any money across although I did straight after and received the following reply.

"Railways Pension Scheme  Single additional payment Thank you for your top-up payment of £300.00, which has now been paid into your pension account. You may be interested to know that you are entitled to receive tax relief on this amount. To claim this, you should write to your tax office, and you may want to include this communication as proof that the amount has been paid into your pension." I wasn't expecting this so contacted HMRC who told me I wasn't entitled to any uplift on my payment so it seems that the £300 I paid in from my net pay is not eligible for any tax uplift at all? Yet if I had paid this into a private pension or via my payroll department from my gross pay the £300 would have been worth £375 when inside a private pension or only cost me £240 via work. I think that is correct? I will contact the RPS again on Monday but is anyone aware of when paying into a pension with the relevant earnings available for that year (I am a basic rate taxpayer) that there isn't any tax advantage to be had? Personally I think the pension scheme is at fault here.

Dazed_and_C0nfused

It sounds like you have made a gross contribution with no tax relief.

This is fairly unusual as in most situations you either make a "net pay" contribution, which reduces the amount of salary which has to be taxed, or "relief at source" where the pension company add the 25%, not 20%, uplift.

This is a common problem with HMRC as what you have done is not that common and posters on here often seem to have problems getting them to understand this type of contribution.

Part of the issue is that you aren't entitled to any "uplift" so I would avoid that phrase with HMRC.  This type of contribution just reduces the amount of income you have to pay tax on, a bit like the Personal Allowance.

You will need to get through to them that this is a gross contribution and you have received no tax relief whatsoever.  As this is the gross amount not the net amount it should save you around £60 in tax (£300 x 20%).

colesy

I think what the scheme is saying is that they will not claim the tax relief on your behalf.  You should still be able to claim the relief via your tax return.

SJG1

Dazed_and_C0nfused said:

It sounds like you have made a gross contribution with no tax relief.

This is fairly unusual as in most situations you either make a "net pay" contribution, which reduces the amount of salary which has to be taxed, or "relief at source" where the pension company add the 25%, not 20%, uplift.

This is a common problem with HMRC as what you have done is not that common and posters on here often seem to have problems getting them to understand this type of contribution.

Part of the issue is that you aren't entitled to any "uplift" so I would avoid that phrase with HMRC.  This type of contribution just reduces the amount of income you have to pay tax on, a bit like the Personal Allowance.

You will need to get through to them that this is a gross contribution and you have received no tax relief whatsoever.  As this is the gross amount not the net amount it should save you around £60 in tax (£300 x 20%).

That sounds like the problem I had with the online chat with HMRC yesterday trying to get them to understand that I hadn't had any tax relief on the contribution. I'd even copied in the details from the pension scheme sent to me. I have asked HMRC to confirm in writing so will see what happens there.
Will also try and  get the RPS to put something on their website about claiming tax relief from this type of contribution. I expect I will not be the only person to come across this problem there.

Dazed_and_C0nfused

It is a recurring theme on here, albeit infrequently.

What often happens is HMRC cannot see past "relief at source" payments, which are the norm, where a basic rate payer wouldn't be due anything back personally from HMRC.  

You will no doubt manage to get the refund eventually but not without a bit more work than should really be necessary!

Preacher64

Colesy is corrected. You will have to file a tax return detailing the additional payment and you should get the option of a refund by cheque or adjustment to your tax code. I think this is explained in the BRASS section of the RPS pension handbook.

Dazed_and_C0nfused

There is absolutely no need whatsoever to file a tax return just to claim tax relief on a single £300 pension contribution.

If you have to file a return for some other reason then yes the contribution would be included on the return but on its own it is not a reason to need to file a return.

Dazed_and_C0nfused

You will have to file a tax return detailing the additional payment and you should get the option of a refund by cheque or adjustment to your tax code. 

Even if did have to file a return that is not how HMRC would ever give tax relief for pension contributions.  You only ever get tax relief for pension contributions in relation to the tax year you made the contribution in.  

So if you make a contribution in 2019:20 you can either get tax relief through your 2019:20 tax code by telling HMRC during the course of that tax year or via your 2019:20 tax return.  The tax relief is never given by an adjustment go your tax code for a different year.

xylophone

From A Guide for Members of Brass

Like your contributions to the Scheme, BRASS contributions are taken from your pay before you pay income tax. This reduces the real cost to you.  By using the Network Rail payroll system, you can contribute up to 75% of your contribution limit and automatically benefit from tax relief. If you wish to contribute more than 75%, you can make supplementary contributions by BACS transfer or cheque direct to RPMI. If you pay any contributions by either of these methods it is your responsibility to reclaim any tax from contributions you pay directly from HMRC.  The OP needs to explain to HMRC that he has made a contribution to the scheme after  he has paid tax on it? This problem seems to come up again and again after members of pension schemes operating "net pay" want to make a contribution as though on a RAS basis.

A guide for members of BRASS (Network Rail section)

Dazed_and_C0nfused

The OP needs to explain to HMRC that he has made a contribution to the scheme after  he has paid tax on it?

I know what you mean but personally I wouldn't phrase it like that as HMRC will likely start off down the "relief at source" route again.

xylophone

I wonder could he write to HMRC citing the information above from the handbook and explaining that he has not received tax relief on the contribution of £300 that he has made?