Tax on Pension Payments

Lisa1978

I would appreciate some advise on my tax code and information regarding pension payments. 

Below is a summary of my tax code (1057L) from HMRC : 

Personal Allowance	12570
Personal Pension Payments	788
	13358
Child Benefit	-659
Profit from Rental property	-1627
Medical Insurance from work	-501
	10571

I contribute Gross £1,575 in pension payments per year (£131.25 a month gross/nett is £105 deducted from my payslip).  
Is it correct that the 'personal pension payments' above states £788 as this is half of what i contribute? Should this figure be £1575? 

Thanks. 

TVAS

Why don't you phone your HR dept for the Tax Ref and phone number and speak to HMRC.

£105 net is not much could you consider increasing. Why not get a projection of benefits at retirement age to see what you might get and then see if along with the basic state pension you can live on. 

Include BTL income hopefully the mortgage will be repaid. 

Lisa1978

TVAS said:

Why don't you phone your HR dept for the Tax Ref and phone number and speak to HMRC.

£105 net is not much could you consider increasing. Why not get a projection of benefits at retirement age to see what you might get and then see if along with the basic state pension you can live on. 

Include BTL income hopefully the mortgage will be repaid. 

Yes i'll give HMRC a call.  I know how difficult it is to get through at the minute so was hoping someone here would know the answer. 

That's just my contribution.  My employer pays a larger contribution.  I will be increasing it but we've just done a lot of home improvements and once loan paid off in 2 years i wlll be increase then.  

Yes BTL properties will all be paid before i'm 55-60. 

Albermarle

Normally for a workplace pension if you contribute from your after tax pay , then the pension provider will add the basic rate tax relief.
If you are a basic rate taxpayer then that should be the end of the story and no effect on your personal tax allowance .

Do you fill in a self assessment tax return each year ? Maybe you have filled in the wrong  box about pensions that you should not have ?

Unless you are maybe a higher rate taxpayer ?

Lisa1978

Albermarle said:

Normally for a workplace pension if you contribute from your after tax pay , then the pension provider will add the basic rate tax relief.
If you are a basic rate taxpayer then that should be the end of the story and no effect on your personal tax allowance .

Do you fill in a self assessment tax return each year ? Maybe you have filled in the wrong  box about pensions that you should not have ?

Unless you are maybe a higher rate taxpayer ?

I am a higher rate taxpayer. 

Dazed_and_C0nfused

If you pay 40% on your wages then £788 is allowing an additional £315 tax relief.

£1,575 x 40% = £630 less relief allowed at source of £315 = £315 relief due via tax code.

NoMore

As a higher rate tax payer, my pension payments are also shown as half of what they are on my personal tax account. Its correct, its just the way the maths works out to return your tax relief.

Albermarle

To add to other comments above .

The tax relief on Pension contributions for a higher rate taxpayer is very generous , so you should take maximum advantage of it whilst it is still available , as one day it might not be . 

Although you can not claim back more higher rate tax than you have actually paid . So if you are only just a higher rate taxpayer , the benefit is more limited .

MX5huggy

You should also be looking to make pension contributions so that the Child Benefit is not taxed.  

Lisa1978

MX5huggy said:

You should also be looking to make pension contributions so that the Child Benefit is not taxed.  

Yes i need to do this! Is there an easy way of calculating how much additional % i should put into my pension so it doesn't affect the child benefit as at the minute it is being taxed. 

I currently pay 3.5% and employer 4.5%, total 8%.  Thanks. 

xylophone

https://adviser.royallondon.com/technical-central/pensions/state-benefits-pension-manuals/child-benefit-avoiding-the-tax-charge/