SIPP contributions and tax return

BuildTheWall

OH’s employer has lazily chosen Nest for employee pensions. Employer contributes the legal minimum and no further matching contributions. We are thinking of contributing the minimum required and investing the rest through her SIPP. Does the contribution to SIPP need to be declared on tax return, assuming basic rate tax payer?

Dazed_and_C0nfused

If you mean a contribution she has paid and received basic rate relief from the pension company (courtesy of HMRC) then yes it needs to be declared on a Self Assessment return if one is being completed.

This applies to both SIPP's and Nest contributions she has paid if they are "relief at source".

dunstonh

Does the contribution to SIPP need to be declared on tax return, assuming basic rate tax payer?

If you get a tax return, then you are required to fill it in correctly.  So, yes.  

It is unusual for a basic rate taxpayer under PAYE to get a tax return.  Has there been some other event that has caused HMRC to take an interest in your OH?  (things like multiple incomes from non PAYE)

BuildTheWall

Sorry to clarify, there has been no request to file returns received from HMRC. So I assume there will be no need to file return unless requested by HMRC? We get the 20% topup automatically in the SIPP and that’s it?

Now we discovered OH will still be in higher rate bracket after her employer and employee contributions. Since we don’t want to invest any further in Nest, she can contribute to SIPP directly, get 20% automatically from HMRC, file tax return voluntarily and get the further 20% from HMRC? 

sjp999

iirc, all it took to reclaim the extra 20% was a letter - no need for a tax return.

Your provider my well have a template letter you can use. 

Dazed_and_C0nfused

And there is no "further 20%".

The gross contribution increases the basic rate band, adding to the amount that can be taxed 20% and reducing the amount taxed at 40%.

But the whole position for the year is reviewed.

kuratowski

Your OH can also do it online, in her personal tax account at gov.uk.  The PAYE section lists all sources of income, go into the employer's page, click check your tax free amount, and on that page there's a link to tell HMRC about a missing allowance or tax relief.  After a couple of days (usually) they send a new tax code.

NB of course she can only get higher rate tax relief if she pays enough higher rate tax.  So if her contributions are big enough to take her down into basic rate tax, then the relief won't necessarily be 20% on the whole lot.

Albermarle

 file tax return voluntarily and get the further 20% from HMRC? 

As far as I know you can not decide yourself to file a tax return . In fact HMRC is slowly reducing the number of people required to fill in a return and they prefer you to do everything via  your on line personal tax account if your situation is relatively straightforward. 

jamesd

You can voluntarily file a tax return and it became properly covered by law only in 2018, before it was... of interesting validity but accepted by HMRC for mundane purposes.

There's no need to use a tax return just to tell HMRC about pension contributions to get the higher rate relief, though, you can do that with a phone call or message.

Albermarle

jamesd said:

You can voluntarily file a tax return and it became properly covered by law only in 2018, before it was... of interesting validity but accepted by HMRC for mundane purposes.

There's no need to use a tax return just to tell HMRC about pension contributions to get the higher rate relief, though, you can do that with a phone call or message.

I would not dispute the legalities . However my own experience is that I had filled in a SA for years and then a couple of years ago received a letter from HMRC to stop ( although my circumstances had not changed ) . If I try to fill in a SA on the website , it kicks me out /does not allow me .

nigelbb

My experience is that all it took was a phone call to get the higher rate tax relief on my SIPP contributions.