Tax relief for buying NHS Additional Pension and paying lump sum

OldBeanz

2014, I bought extra pension through the PCSPS - which is HMRC's pension scheme. No, they did not want to return any tax until questioned and also limited to that year's tax. Thankfully I only missed out on £30 but that was through luck rather than good fortune.

Jan_the_pensioner

Dazed_and_C0nfused said:

I'm afraid your tax relief is limited to £4,674 with this type of contribution.  

As I never claimed tax relief before, I hoped that they would consider the total amount of  tax I paid in the last three years. 

Jan_the_pensioner

Cancri said:

I have done this in the past and had no issues.

I simply wrote to HMRC after the end of the tax year with the confirmation letter from the pension team confirming receipt of the lump sum payment, a copy of my P60 (yes I know they should have the information, but belt and braces), and a request for them to recalculate the tax I should have paid and to send me a cheque for the refund. A few weeks late the refund turned up.

I sent exactly the same documents to them; P60, confirmation letter from NHS pensions about the payment and cover letter. They wrote back one sentence saying: "Please check on our website at GOV.UK for further information as you are a basic rate tax payer, you don't meet the criteria to claim tax relief on additional pension contributions." There seems to be no standard response to this.

Dazed_and_C0nfused

I think you are getting confused between the limits for contributing and how much tax relief you can get.

Tax relief is only ever based on the tax position for the tax year you make the contribution in.  If you paid the £42k in 2019:20 and paid £4,674 in tax then the maximum tax relief you can receive is £4,674.

You could have contributed £23,380 and still received tax relief of £4,674.

One (small) consolation may be that if you are married you could apply for Marriage Allowance for 2019:20 and your spouse would get a tax deduction of £250.  This isn't possible if they themselves are a higher rate payer.

Dazed_and_C0nfused

Jan_the_pensioner said:

Cancri said:

I have done this in the past and had no issues.

I simply wrote to HMRC after the end of the tax year with the confirmation letter from the pension team confirming receipt of the lump sum payment, a copy of my P60 (yes I know they should have the information, but belt and braces), and a request for them to recalculate the tax I should have paid and to send me a cheque for the refund. A few weeks late the refund turned up.

I sent exactly the same documents to them; P60, confirmation letter from NHS pensions about the payment and cover letter. They wrote back one sentence saying: "Please check on our website at GOV.UK for further information as you are a basic rate tax payer, you don't meet the criteria to claim tax relief on additional pension contributions." There seems to be no standard response to this.

You just need to write again and maybe start by clearly stating that it is not a "relief at source" contribution but a one off gross payment where no tax relief was received at the point you made the payment.

xylophone

I sent exactly the same documents to them; P60, confirmation letter from NHS pensions about the payment and cover letter. They wrote back one sentence saying: "Please check on our website at GOV.UK for further information as you are a basic rate tax payer, you don't meet the criteria to claim tax relief on additional pension contributions." There seems to be no standard response to this.

See https://forums.moneysavingexpert.com/discussion/comment/77626930/#Comment_77626930

https://forums.moneysavingexpert.com/discussion/comment/77626942/#Comment_77626942

 Above link gives technical guidance  to the HMRC clerk (?)  as to how to go about the operation of giving the tax relief?

Example: Relief due on gross superannuation payments

...... individual has made a £1,000 gross lump sum payment to a superannuation scheme and relief has not been given through the net pay arrangement and you have established that tax relief is due using the Pension Tax Manual (see Pension Tax Manual (PTM) at PTM044240). Generally in these cases tax relief is given through the Self Assessment system.

On page TR 4 of the SA return for 2020  Box 3 

 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/874083/sa100_English_Form.pdf

Payments to your employer’s scheme which were not deducted from your pay before tax – this will be unusual – read the notes 

From the notes

 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/874084/SA150_English_Notes.pdf

Box 3 Payments to your employer’s scheme which were not deducted from your pay before tax

In some schemes, an employer takes your personal contributions from your pay before they tax what’s left. If you (or someone else who is not your employer) paid into such a scheme and no tax relief was given, you can claim that tax relief now. Put the total unrelieved amount you paid in the 2019 to 2020 tax year in box 3.

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Jan_the_pensioner

Dear folks,
After reading your very helpful suggesions I wrote the below letter to Tax office 6 weeks ago. I received no response so I called them today. Tax officer confirmed that they received my emailed. She again said that the tax office's original response that because I was a basic rate tax payer, I was not entitled for tax relief. I repeated that the pension contribution did not benefit from any tax relief under either net pay arrangement nor relief-at-source arrangements. But this did not make any change in her opinion. I asked why they did not write back to me about their response. She said they checked and seen that I paid correct amount of tax so they filed my letter.
This is now so frustrating. I very much appreciate your advice on what else I can do.
Thank you.
Jan

Pay As You Earn and Self Assessment HM Revenue and Customs BX9 1AS

13.10.2020

Dear Sir/Madam,

NI : xxxx

I have contributed £41,840 into a registered Pension Scheme to buy Additional Pension in November 2019. I paid it as lump sum. I attached the payment confirmation to this letter. The pension contribution did not benefit from any tax relief under either net pay arrangement nor relief-at-source arrangements.

I am a basic rate taxpayer. In 2019/20 tax year I earned £35,881.92. I paid £4,674.40 tax for this income. I attached my P60 certificate to this letter. In addition to buying £41,840 , I paid £3,645.52 as standard employee annual contributions. I included Total Reward Statement which shows both standard and lump sum pension contributions.

I request Tax Relief (£4,674.40) on the gross pension contribution. 

Many thanks and kind regards.

Dazed_and_C0nfused

You could refer them to their own guidance.

It is quite old but there is an example here under the section called concessional relief (I think this is just the method they use to cope with a relatively rare situation)

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye130025

xylophone

https://webarchive.nationalarchives.gov.uk/20110617043205/http://www.hmrc.gov.uk///pensionschemes/faqs/taxrel.htm
Above is the archived guidance under "public sector schemes".

Guidance to HMRC clerk for applying "concessional relief" https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye130025#IDA0H2PE

Concessional Relief

You will also need to record any other relief as Concessional relief where no other coding item exists, see PAYE11110.

You should always

• Make a Contact History note detailing the source amount
• Set the Inhibit Automatic Reconciliation indicator, see PAYE93015
• Create a BF (PAYE105520) with a review date after the end of the tax year

Example: Relief due on gross superannuation payments

For 2008 to 2009 individual has made a £1,000 gross lump sum payment to a superannuation scheme and relief has not been given through the net pay arrangement and you have established that tax relief is due using the Pension Tax Manual (see Pension Tax Manual (PTM) at PTM044240). Generally in these cases tax relief is given through the Self Assessment system.

If an employee requests that tax relief be given in their tax code for the current year, you should

* Enter the gross amount paid £1,000 as Concessional relief
* Make a Contact History note of the lump sum payment
* Set the Inhibit Automatic Reconciliation indicator for CY
* Create a BF with review date in CY+1

When the BF is reviewed, you will need to

* Confirm the amount of the lump sum payment from the Contact History note
* Amend the Concessional relief to nil
* Enter the gross payment as RAR for the year of reconciliation only

Note: This will ensure the correct amount of tax relief is given in the final tax liability for the year in which the payment was made. See PAYE93090 for more information.

Perhaps you might photocopy the above and include it with your next letter - perhaps make it a complaint?
https://www.gov.uk/complain-about-hmrc

hugheskevi

It would be worth trying to call a few more times, armed with the links in the posts above. HMRC contact centre staff include some very knowledgeable staff who have been there a long time, and if you get through to one of them they should know what to do immediately. It will be much easier than trying to convince someone who has no idea what they are talking about and are just repeating the same mistakes their colleagues have made, which is unlikely to lead to a good outcome. However, they might be willing to transfer you to someone more appropriate if you say preface the conversation saying you have a complex pension tax query.

It is also better to call in peak weekday hours, and not at evenings and weekends as those shifts are usually staffed by newer recruits.

Failing that, it will be going through a complaints process which will get to the right outcome, but will take a while.