Work pension not providing "Relief at Source"

ranturble

Hello all

About six months ago I qualified for a company pension with my new employer. Both my employer and myself have been making regular contributions into the plan since then.

Based on my payslips (and what I was told by my employer) I understood that the contributions were taken out of my payslips *after* tax. However, when I came to fill out my self assessment this year I noticed that no "Relief at Source" had been added to the pension balance (i.e. the balance amounted to the total contributions from the payslips, and nothing more).

For some context:

• The pension provider we use is not the best in the world (they have no actual helpline you can call, only 2-week response turnaround on emails), but their literature says that contributions to their plans are taken *before* tax.
• My employer has historically deducted pension contributions *after* tax, so my understanding is that they continued to do so after they migrated to the new provider - and I have been assured that the contributions are still deducted *after* tax.
  
• I have contacted the pension provider to ask them to confirm if they do or do not claim Relief at Source, but that response could take up to a month to come through.

Should the pension provider be claiming "Relief at Source" if this the contributions are deducted after tax? Could it be that there has been a mix up between the pension provider and my employer as to the nature of the contributions?

I am a 40% bracket tax payer, so I stand to miss out on at least 20% of my contributions even if I fill out my self-assessment. But perhaps this is a normal situation that I am unfamiliar with and I just need to claim back the remaining tax some other way?

If anyone has any advice I would greatly appreciate it.

Many thanks

MaxiRobriguez

Worthwhile talking to your employer to get the clarity you need as it will be they who set the scheme up and only they who can fix/backdate any issues. You shouldn't be needing to claim back on self-assessment.

Dazed_and_C0nfused

Which pension company is it?

Not all auto-enrolment providers use relief at source.

If it is net pay then you have received the maximum possible tax relief each payday and you do not enter anything on your Self Assessment return in relation to these pension contributions.

dunstonh

Should the pension provider be claiming "Relief at Source" if this the contributions are deducted after tax? Could it be that there has been a mix up between the pension provider and my employer as to the nature of the contributions?

The taxation and NI should match the method being used.    The employer decides which method to use.

I am a 40% bracket tax payer, so I stand to miss out on at least 20% of my contributions even if I fill out my self-assessment

Salary sacrifice is clearly a better option for you but you will still get the correct tax relief unless the employer is making a mistake.

Most modern AE compliant schemes support salary sacrifice.  Most older small employee schemes did not.  Many of those moving from older schemes to modern ones do switch to salary sacrifice.   The scheme booklet/welcome pack should explain what method is being used and you should be able to work out if it is correct from the payslip.     Many pension providers will also show the contribution received on their transaction history with text that indicates if it is salary sacrifice, employer or employee contributions.

ranturble

MaxiRobriguez said:

Worthwhile talking to your employer to get the clarity you need as it will be they who set the scheme up and only they who can fix/backdate any issues. You shouldn't be needing to claim back on self-assessment.

Thanks. I have spoken to them a few times about it.

I'll be honest, I'm not that confident that anyone really knows what is going on. I will keep pushing to get confirmation. The main thing I wanted to know was if "Relief at Source" is should be provided if the contributions are after tax.

Dazed_and_C0nfused

It is very simple to check this,

but their literature says that contributions to their plans are taken *before* tax.

Say your salary is £40k and your pension contributions are 10%.

If it is net pay your P60 will show taxable pay of £36k.  And as such there is no relief to be added to your pension as you have paid less tax via net pay.

ranturble

Dazed_and_C0nfused said:

Which pension company is it?

Not all auto-enrolment providers use relief at source.

If it is net pay then you have received the maximum possible tax relief each payday and you do not enter anything on your Self Assessment return in relation to these pension contributions.

The pension company is Evolve.

My employer has been pretty adamant that it is not a net pay plan. However, I will keep pushing to find out for certain.

I even used the listentothetaxman calculator to compare my payslip to what would be expected in a net pay vs relief at source plan. Again, this indicated it should be relief at source.

Dazed_and_C0nfused

If it is this company then they make it clear they are net pay.  Which your payslips/P60 would clearly show.

https://evolvepensions.co.uk/crystal/member-information/

ranturble

dunstonh said:

Should the pension provider be claiming "Relief at Source" if this the contributions are deducted after tax? Could it be that there has been a mix up between the pension provider and my employer as to the nature of the contributions?

The taxation and NI should match the method being used.    The employer decides which method to use.

I am a 40% bracket tax payer, so I stand to miss out on at least 20% of my contributions even if I fill out my self-assessment

Salary sacrifice is clearly a better option for you but you will still get the correct tax relief unless the employer is making a mistake.

That's what I'm worried about - I am concerned my employer has made a mistake in the pension plan arrangement. What I wanted to find out was if I were mistaken in my concern, and perhaps this is a normal situation that I just wasn't familiar with.

All my checks and queries (payslips, talks with my boss, checking and rechecking the figures, etc,.) suggest that it is a Relief at Source plan, but the pension provider is treating it like a net pay plan. It sounds like someone somewhere messed up the arrangement and there could be a good deal of back-corrections due in the overall pension plan.

ranturble

Dazed_and_C0nfused said:

If it is this company then they make it clear they are net pay.  Which your payslips/P60 would clearly show.

Yes - this was what I discovered in my initial investigation.

My payslips suggest the deductions are post-tax, which is also what my employer has said.

I guess at this point I just need to assume that someone has messed up the pension arrangement as too many pieces of information appear to contradict each other.

Thanks for the advice.

xylophone

https://evolvepensions.co.uk/crystal/member-information/

Is this your scheme?

Have you registered for evolink?