Checking my understanding of Self Assessment return

MetManMark

Hi there
I am just starting my SA return for the last financial year. 
My salary was ~£58k 
I put ~£8k into a SIPP (paid for out of my current account after tax with the pension provider reclaiming the basic 20%)
I had other taxable deductions (working from home due to COVID) and charitable donations etc that probably make up another £1000
Because of the above I understand from the notes that I do not have to complete the High Income Child Benefit charge as my net income is less than £50k.
So am I right in thinking that I will have paid some 40% tax through my PAYE and that given that I put a slug into a SIPP then I will be due a refund of the additional 20%? My understanding is that the answer to this is "yes". Is the value of my rebate 20% of £8k ie £1600? 

Thanks in advance for what is probably a noddy question. It is the first year that I have had to do this .
Mark

Dazed_and_C0nfused

You don't get an extra 20% in the way you describe and you don't enter your "salary".  It is the taxable pay from your P60, which is often less than your salary.

The simplest way to understand this is to complete (but don't file) your return with everything expect the pension contribution.

Check the calculation and note the amount of tax owed or overpaid.

Then include the pension contribution and check the calculation again.  The difference between the first and second calculation is the additional tax relief you ar benefiting from.
NB.  When you review the revised calculation the pension contribution does not reduce your taxable income, it increases the amount of your basic rate tax band, same as Gift Aid.

[Deleted User]

There is also the common misconception that, because one pays SOME tax at HR all of the SIPP contribution will attract relief at 40%. In this case the contribution is 8000 which will be made up to 10000 by the provider. A further 20% relief can be claimed on the lower of 10000 (not 8000) or the amount upon which tax would be payable at 40%. The ‘trick’ suggested by Dazed is a good way of determining this.

MetManMark

OK - thanks for the tip. So I will definitely do this. 
I have double checked:
My "taxable pay" is just under £58k
GiftAid is ~£500
WFH COVID allowance ~£300
Additional pension contributions made £8000 (including the 20% claimed back by the provider)
So am I right in thinking that I should be due additional tax relief (ie 40% - 20%) on the £8k that I paid into my private pension (ie the pension provider claimed back the base amount and I now need to claim the rest through the SA process)?

Thanks!
M

[Deleted User]

Based on that we shall assume that your gross income is 58000. Your basic rate band, without the SIPP payment, would be extended by £625. As a result, 12800 would be free of tax, 38125 would be taxed at 20% with the remaining 7075 at 40%. Therefore you can only receive higher rate relief on your SIPP payment of £1415 (7075 @ 20%),

This is based on the assumption that the amount paid towards your SIPP was actually £6400, grossed up to £8000.

Jeremy535897

purdyoaten2 said:

Based on that we shall assume that your gross income is 58000. Your basic rate band, without the SIPP payment, would be extended by £625. As a result, 12800 would be free of tax, 38125 would be taxed at 20% with the remaining 7075 at 40%. Therefore you can only receive higher rate relief on your SIPP payment of £1415 (7075 @ 20%),

This is based on the assumption that the amount paid towards your SIPP was actually £6400, grossed up to £8000.

SA will also deal with the extra 20% tax relief on the gift aid of approximately £125, so a repayment of £1,530 approximately, assuming none of this was included in the coding.

[Deleted User]

Jeremy535897 said:

purdyoaten2 said:

Based on that we shall assume that your gross income is 58000. Your basic rate band, without the SIPP payment, would be extended by £625. As a result, 12800 would be free of tax, 38125 would be taxed at 20% with the remaining 7075 at 40%. Therefore you can only receive higher rate relief on your SIPP payment of £1415 (7075 @ 20%),

This is based on the assumption that the amount paid towards your SIPP was actually £6400, grossed up to £8000.

SA will also deal with the extra 20% tax relief on the gift aid of approximately £125, so a repayment of £1,530 approximately, assuming none of this was included in the coding.

Yes, of course. I was emphasising the fact that the op would not be entitled to HR relief on the full £8000 which appears to be expected.

MetManMark

Thanks you @Dazed_and_C0nfused, @[Deleted User], @Jeremy535897 for your answers. I had a shot at completing the form yesterday and the results are in line with your comments. Thanks - on the whole the SA seems to be pretty efficient. One final quick question: last year I was owed something like £4.20 but this was too small an amount to be refunded. Do I have to claim this in some way or is it just added to the refund that I am due this year? I don't think I spotted a place in the form to flag this so am guessing that they know what is owed to me and will incorporate it in this years more significant refund.
Thanks!
M

Jeremy535897

Look at your personal tax account online.