I think I'm being a bit thick, need help working a Gross figure out.

crv1963

Hello
I have a question about claiming HR tax relief on pension contributions-
HL sent me a template letter to send to the tax office so the relief can be claimed via payroll-


Dear Sir/Madam
I hereby claim higher-rate tax relief in respect of contributions made to personal pension plans. Please find the information required listed below: Claim for year 6 April to 5 April NI Number:
Gross annual pension contributions:
My personal monthly contributions will continue at: gross per month.

I will have total taxable income of approximately £62 k this 2020/21 tax year, so I've opened a SIPP putting 1k pm into it by DD. This will be made up to £1250 pm by HL adding tax relief- I have to claim the rest either by sending in the above letter or at the end of the tax year. I can't work out what figures to put in as contributions.as I am paying from net pay. I know that there must be a simple way of working this out. The plan is - pay 12k from earnings to reduce HRT to zero (or there about), this will be made up to 15k by HL adding relief of 3k, the other 3k relief that comes back to me to then be put in Mrs CRV SIPP (she has earnings to cover this).

I would ring HL tomorrow but today is my only day off until next weekend so need to get the letter in post. Also just to complicate matters I am also paying 5% of 42 k of earnings into a NEST pension but am ignoring that for now for my letter or is that a mistake and should I include it?

Apologies if this is a simple math question that I should be able to do myself!

[Deleted User]

It’s the gross personal pension contributions (with the tax added).
I did it via self assessment and got the refund within 6-7 days.
They then change your tax code for the ongoing ones.

crv1963

So I put Annual sum= 15k, monthly £1250?

[Deleted User]

Yes, but I think you should include the Nest contributions as well, they are pension contributions which haven’t been taxed relieved at source

Albermarle

Gross annual pension contributions:
My personal monthly contributions will continue at: gross per month

The figures you need to give to HMRC are Gross ( as it says ) so your contribution + basic rate tax relief.

 I am also paying 5% of 42 k of earnings into a NEST pension but am ignoring that for now for my letter or is that a mistake and should I include it?

 The issue here is how the contributions are taken from your salary. If they taken from your already taxed earnings and the provider adds basic rate relief then you need to add the gross contribution to the gross contribution into your SIPP.

If the contributions are taken out before tax is applied ( by salary sacrifice maybe ) then you do not need to report them as you have gained the full relief anyway. 

crv1963

Thank you both.
I'll have to e-mail Pension Dept when at work tomorrow, I think my NEST contribution is from NET pay but as payslips are electronic and I can't access them presently (a different story) I'll need to ask. Oh well, letter can go during the week after I finish work. I hope to get my tax code changed so I can increase Mrs CRV contribution level monthly but if it has to be added as a lump sum this year it isn't the end of the world.

JoeCrystal

crv1963 said:

Thank you both.
I'll have to e-mail Pension Dept when at work tomorrow, I think my NEST contribution is from NET pay but as payslips are electronic and I can't access them presently (a different story) I'll need to ask. Oh well, letter can go during the week after I finish work. I hope to get my tax code changed so I can increase Mrs CRV contribution level monthly but if it has to be added as a lump sum this year it isn't the end of the world.

What does your NEST contribution history say? My workplace pension shows that the amount deducted on a payslip is £80, for example, which then became £100 in the transaction history with the pension provider. One should print all the payslips from the electronic database. The paper record is invaluable. I had a situation a few years ago when my employer switches the online payslip provider and told everyone that they got 30 days to download/print their old payslips from it before shutting the site down permanently. 

xylophone

I'll have to e-mail Pension Dept when at work tomorrow, I think my NEST contribution is from NET pay

https://www.nestpensions.org.uk/schemeweb/helpcentre/contributions/calculating-contributions/calculate-tax-relief-with-earnings-basis.html#:~:text=The%20tax%20relief%20method%20we,after%20tax%20and%20National%20Insurance.
Some pension schemes use a net-pay approach for tax relief, where the employer deducts contributions from a worker’s salary before calculating income tax on the reduced amount. NEST doesn’t use this approach.
Above seems relevant.

zagfles

Deleted_User said:

Yes, but I think you should include the Nest contributions as well, they are pension contributions which haven’t been taxed relieved at source

Provided they aren't salary sacrifice contributions, as they are employer contributions and tax relief for the employee is effecitively given though the reduction in salary. Looks like NEST don't do "net pay" so that's not relevant.

crv1963

Thank you all, I have a clearer idea of what figures to put in my letter now.