Update personal pension contribution on gov.Uk site

btcp

I logged into my tax account on gov.Uk and see a Personal pension payment section under How your tax is calculated, and there and an option to amend. The number there is incorrect as I made a higher personal contribution this year. Should I amend it? Does anyone have experience in it, how well does it work? I normally submit SA but also in favour of self serve tools. If I can correct the data without calling them it would be perfect! Can also use it in future if need to update this number, as I contribute to pension irregular when I have extra cash. 

Dazed_and_C0nfused

Are you referring to the actual (gross) pension contribution or the tax code adjustment to provisionally allow any higher rate tax relief due?

The two figures can be quite different.

And the tax code adjustment relies heavily on your expected earnings from your employment so you may as well update as well at the same time as you will no doubt know better than HMRC what you expect your taxable pay (P60 pay figure) for the year to 5 April 2021 to be.

btcp

I am referring to the actual pension contribution I made on top of my salary 
sacrifice payments. Let me give you more details of what I see online. I go to What’s make up your tax free amount page, then see  my tax free is amount negative, and below there are the sections: 
how your tax free amount is calculated: 

• personal allowance £0

• Additions - personal pension payments £2400

• Deductions - estimated tax you owe this year, tax interest in savings and investment, 
• your total tax free amount. 

Personal pension payment has update/remove option, and it takes to Tell us about your tax free allowance form where I can fill out the numbers:

•  type of tax free allowance, 
• incorrect gross amount of tax free allowance,
•  correct gross amount of tax free allowance. 
• I paid in £6000 this year not £2400 so that’s what I was going to update. 

As for my expectations in regards to the pay figure, I cannot be certain as I have a couple of RSU vest periods as well as a bonus coming. These numbers are only predictable to the certain extent. 

Dazed_and_C0nfused

It looks like £2400 isn't your pension contribution.

It is the adjustment needed to ensure you receive higher rate relief.

Let's say HMRC had estimated a contribution amount of £4,800 based on previous information supplied.

The basic rate tax relief on that would be £960.

If you earn enough to be paying sufficient higher rate tax on at least £4,800 then you need to get another £960 tax relief (£4,800 taxed at 20% instead of being taxed at 40%).

If HMRC increase your tax code allowances by £2,400 then your tax code increases by 240 points i.e. 1490L instead of 1250L, and your employer will deduct £960 less tax (£2,400 x 40% = £960)

btcp

If that’s the adjustment, I wish they label it as adjustment and don’t give an option to amend it. A regular person would not be able to calculate their adjustment correctly, and I don’t think we should. 

Dazed_and_C0nfused

It may be you provide the (gross) contribution figure and they made any adjustment necessary but the actual entry in your tax code is just to ensure you get higher rate relief.

If they included £4,800 (in my example) your employer would deduct £1,920 less tax, far more than the tax relief would normally be.

btcp

Ok, makes sense. I will fill it out a d see what happens.

Dazed_and_C0nfused

If you are due higher rate relief on the full £6,000 the tax code adjustment will normally be £3,000.

HMRC will also assume you are going to pay £6,000 again in 2021:22.

btcp

Dazed_and_C0nfused said:

If you are due higher rate relief on the full £6,000 the tax code adjustment will normally be £3,000.

HMRC will also assume you are going to pay £6,000 again in 2021:22.

That’s why this feature would be useful for me. I know they will assume it based in the current year, but next year will be very different for me. I am planning to use allowance from previous years and pay more as a lump sum. Next year I may just increase my salary sacrifice. An ability to provide this information online is convenient.