Fidelity Pension tax relief

saajan_12

cloud_dog said:

saajan_12 said:

I phoned Fidelity, they provided bank details and I arranged a bank transfer. I do see they've added the amount I transferred to my account and invested it into the same funds as I had the existing pot. Didn't involve my employer at all as the amount was larger than one month's pay. 

In Fidelity, if you click on Transactions there should be recent transactions and a tab for 'Pending'.  This should list the awaiting TR deposit.

I am assuming that Fidelity process this as a personal contribution.  Do you have any correspondence confirming this?

I made the transfer a year ago, so I presume it wouldnt still be pending? 
(my fault for not checking since then). 

The only correspondence was around identity checks and submitting bank statements, so they knew it was coming from my personal bank account. 

Note this is a 'workplace pension' which I'm viewing in Fidelity PlanViewer. The look of the site is a little different to how I view my S&S ISA etc so there's no 'Secure Documents' or 'Pending Transactions' section. I've emailed pensions.service@fil.com yesterday, still awaiting a response. 

MDMD

It sounds as if they have just treated it as another employer salary sacrifice payment, if they gave you the bank details they won’t necessarily have known it was from you or at least not processed it as such.

I’d call them to query.

saajan_12

Fidelity replied, stating 
"when a member makes a payment directly into a trust scheme, they will not receive any tax relief directly from Fidelity and the amount will be treated as gross"

My problem is this is contrary to any information I can see prior to making the transfer (eg the help section). Had I known that, I would have transferred in the full 45k as planned. I specifically reduced it to 36k upon reading the help info, thinking they would add 25% which would send me over my allowances if I transferred 45k. 

I've now lost out on the 9k of my allowance and (crucially this year!) lost the gains on 9k worth of the pension investments (buying at March 2020 levels)

Edit: clarified who sent the response above

xylophone

https://forums.moneysavingexpert.com/discussion/6194603/tax-relief-for-buying-nhs-additional-pension-and-paying-lump-sum/p3

I am wondering whether it is worth your while contacting HMRC?

saajan_12

xylophone said:

https://forums.moneysavingexpert.com/discussion/6194603/tax-relief-for-buying-nhs-additional-pension-and-paying-lump-sum/p3

I am wondering whether it is worth your while contacting HMRC?

Thanks for the link - amazed this isn't a better understood problem, given how common it is! 
However I don't necessarily have a problem with HMRC (yet). I complete annual self assessments, so I presume I could file an amended return for 2019/20, stating the gross pension contribution was 36k not 45k, and so get the full relief on the lower amount. 

However this doesn't address the issue of lost allowance and gains (the funds my pension is invested in appreciated 40% over the last 12 months) as my gross contribution would now be lower than intended. 

Albermarle

However this doesn't address the issue of lost allowance and gains (the funds my pension is invested in appreciated 40% over the last 12 months) as my gross contribution would now be lower than intended. 
A lesson learnt maybe ?
I made the transfer a year ago, so I presume it wouldnt still be pending? 
(my fault for not checking since then). 

saajan_12

Albermarle said:

However this doesn't address the issue of lost allowance and gains (the funds my pension is invested in appreciated 40% over the last 12 months) as my gross contribution would now be lower than intended. 
A lesson learnt maybe ?
I made the transfer a year ago, so I presume it wouldnt still be pending? 
(my fault for not checking since then). 

Yes and no. 
Absolutely will be checking statements etc to make sure it went through as expected in future. 

At the same time, for this precise situation, I don't think it would have changed much. I put in the lump sum at the end of March (once I was sure how much other income / contributions I'd have for the year vs allowances, and when the market really found what looked like a floor). By the time I could have seen the tax relief portion not being applied, it would have been the next tax year, meaning I'd have still lost the allowance and wouldn't have room to pay in. 

In any case, surely I can learn the lesson (from the stress / running around of it all), but also get what I'm due per their information ?

zagfles

saajan_12 said:

Fidelity replied, stating 
"when a member makes a payment directly into a trust scheme, they will not receive any tax relief directly from Fidelity and the amount will be treated as gross"

My problem is this is contrary to any information I can see prior to making the transfer (eg the help section). Had I known that, I would have transferred in the full 45k as planned. I specifically reduced it to 36k upon reading the help info, thinking they would add 25% which would send me over my allowances if I transferred 45k. 

I've now lost out on the 9k of my allowance and (crucially this year!) lost the gains on 9k worth of the pension investments (buying at March 2020 levels)

Edit: clarified who sent the response above

The help section you quoted doesn't look specific to your employer's scheme. It says rather vaguely "in many cases" and mentions personal pensions, your scheme isn't a personal pension, it's a workplace scheme. And like most workplace scheme, it seems to be set up to treat employee contributions as "net pay", ie deducted from your pay before tax.

If you make additional contributions to such a scheme by directly paying in, they won't add tax relief as they would in a RAS scheme like a SIPP, it's treated as a pure gross contribution because that's the way the scheme was set up.

This is different to the Fidelity SIPP (or any other SIPP), which uses RAS and where they claim basic rate relief from HMRC.

Make sure you use the correct box on the tax return, ie the one that says something like "contributions to employer's scheme not deducted from pay". Then you'll get full relief.

However if it takes your income below the personal allowance, you won't get any tax relief within the personal allowance (as you would with a RAS scheme).

Albermarle

If you make additional contributions to such a scheme by directly paying in, they won't add tax relief as they would in a RAS scheme like a SIPP, it's treated as a pure gross contribution because that's the way the scheme was set up.

I think it must be variable between schemes . If I pay a lump sum to my workplace salary sacrifice scheme , they add the tax relief to the lump sum .

zagfles

Albermarle said:

If you make additional contributions to such a scheme by directly paying in, they won't add tax relief as they would in a RAS scheme like a SIPP, it's treated as a pure gross contribution because that's the way the scheme was set up.

I think it must be variable between schemes . If I pay a lump sum to my workplace salary sacrifice scheme , they add the tax relief to the lump sum .

How do they treat employee conts taken from pay (sal sac conts are obviously employer conts so will never have tax relief added). I would have thought as RAS too, ie taken after tax? Wouldn't have thought they'd use net pay and RAS in the same scheme?