Tax relief for buying additional NHS pension via a lump sum

Tree10

Hi all.
I paid 4,9k last July to buy 500£ of extra pension. For some reason i thought i had to wait to the next tax year so they could process this, so I contacted HMRC yesterday after reading the useful thread below.

https://forums.moneysavingexpert.com/discussion/6194603/tax-relief-for-buying-nhs-additional-pension-and-paying-lump-sum/p1

 i was armed with all the links and information from that thread however, the man was not open to reasoning with me and was fixed in that i cannot claim relief as i am not in the higher rate tax band. He put me on hold to check the Concesional relief I told him about and given my insistence, he put me on hold a second time to find someone with more experience in pensions, but he was told i was wrong. After  half an hour it was a "your word against mine" time of situation so i said i would find more information and submit it by post. 

He told me there is no email where i could send my letter and documentation/links, so I am setting now to write a letter and print out any HMRC information. 
The problem is, in the above MSE thread some of the links are "archived" and in the others i cannot see anything that clearly states that i am due this type of relief. I dont want to send a letter and wait for it just to be filed away.

Does anyone who has been successful in claiming relief, has a template of the letter they send? Or can they point me to the specific part of the Pensions Tax manual where this is dealt with? I am navigating through the manual and can't find it, but to be honest I am a physio and English is not my first language so the jargon could all be going over my head. 

Thank you very much!

Tree10

Another option for me would be to fill the tax self- assessment form, Box 3, but i only work NHS and have no other source of income so I have never done it before. would it be reasonable for me to fill it or should i keep away from it? My tax credit is quite a mess this year because during the lockdown i received free nursery from my employer and this is being charged as 3,900 benefit in kin this year (i managed to dodge it last year as i thought it was a mistake but my trust has said to everyone involved that it is not and we have to pay it, my tax code currently stands just above L800! I am also leasing an electric car via salary sacrifice.

Summarising, i dont want to confuse HMRC employees any further. Getting a refund or check would be the easiest. But if there isn't any other option i will have to submit the self-assessment.

Box 3 Payments to your employer’s scheme which were not deducted from your pay before tax

In some schemes, an employer takes your personal contributions from your pay before they tax what’s left. If you (or someone else who is not

your employer) paid into such a scheme and no tax relief was given, you can claim that tax relief now. Put the total unrelieved amount you paid in the 2021 to 2022 tax year in box 3.

This may happen if:

• you paid more contributions than you earned in that job

• your employer could not take any contributions from your pay before taxing it, for example if you were paid close to 5 April

• you’re not an employee but are a member of a public services pension scheme or a marine pilots’ fund

Do not include any personal contributions that had relief at source, such as a group personal pension scheme.

Dazed_and_C0nfused

Try the third bullet here.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044210

I don't think completing a Self Assessment return just for this is a wise move.  You are adding further complexity and opportunity for additional problems to occur.

I presume you are aware that any tax relief due is based on your overall tax situation, you do not get an automatic 20% like with a Relief at source contribution.

Tree10

This i what i have drafter so far (Does it read right?)
______________________________________-
Dear Sir/Madam,

 In July 2021 I made a lump sum contribution of £4,900 into a registered pension scheme which does not provide any tax relief on contributions (see official payment receipt attached).

 This pension contribution did not benefit from any tax relief under either net pay arrangement nor relief at source arrangement. 

 Given this, could you please recalculate the tax I should have paid in the tax year 2021-2022?

The tax manual states that I could also claim this tax back by completing a self-assessment (see page 10 of Box 3 of Tax return notes, attached). Nevertheless, since I work full-time in NHS and I have no other source of income I feel that filling this is unnecessary given my circumstances. 

 Regards,

______________________________________

Dazed_and_C0nfused said:

Try the third bullet here.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044210

I don't think completing a Self Assessment return just for this is a wise move.  You are adding further complexity and opportunity for additional problems to occur.

I presume you are aware that any tax relief due is based on your overall tax situation, you do not get an automatic 20% like with a Relief at source contribution.

Thanks, i will print that link too. I recognise you from other the other pension threads, we are blessed in MSE with people like you!

"In these circumstances a member may make a claim to obtain the balance of tax relief available on the contribution, generally via the Self-Assessment system." It doesn't suggest any other method to claim it, so I hope the HMRC employee that reads my letter has common sense. 

Regarding the tax relief, do you mean that I wouldn't get the 20% back? I earned 32k last tax year. To be honest i would be thankful for any money i get back, but is good to set my expectations right. 

Dazed_and_C0nfused

You may get 20% back (as part of your overall tax calculation for that year) but these contributions work a bit like the Personal Allowance.

It isn't a fixed 20% like relief at source, you get another £4,900 before having to pay tax.

So if you earned say £15k and paid £500 tax you could only get £500 back.  But if your P60 shows taxable pay of £32k you are highly likely to benefit by £980.

You will need to send them your P11D and any other information needed to calculate your final liability/refund for 2021:22.  

Tree10

Last question before I submit my letter...

What postal address do i submit it to? It is not about PAYE, or self-assessment. I can see a different departments  have different postal codes so  i dont want to mess it up by sending it to the wrong one

jem16

Tree10 said:

This i what i have drafter so far (Does it read right?)
______________________________________-
Dear Sir/Madam,

 In July 2021 I made a lump sum contribution of £4,900 into a registered pension scheme which does not provide any tax relief on contributions (see official payment receipt attached).

 This pension contribution did not benefit from any tax relief under either net pay arrangement nor relief at source arrangement. 

 Given this, could you please recalculate the tax I should have paid in the tax year 2021-2022?

The tax manual states that I could also claim this tax back by completing a self-assessment (see page 10 of Box 3 of Tax return notes, attached). Nevertheless, since I work full-time in NHS and I have no other source of income I feel that filling this is unnecessary given my circumstances. 

 Regards,

______________________________________

Dazed_and_C0nfused said:

Try the third bullet here.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044210

I don't think completing a Self Assessment return just for this is a wise move.  You are adding further complexity and opportunity for additional problems to occur.

I presume you are aware that any tax relief due is based on your overall tax situation, you do not get an automatic 20% like with a Relief at source contribution.

Thanks, i will print that link too. I recognise you from other the other pension threads, we are blessed in MSE with people like you!

"In these circumstances a member may make a claim to obtain the balance of tax relief available on the contribution, generally via the Self-Assessment system." It doesn't suggest any other method to claim it, so I hope the HMRC employee that reads my letter has common sense. 

Regarding the tax relief, do you mean that I wouldn't get the 20% back? I earned 32k last tax year. To be honest i would be thankful for any money i get back, but is good to set my expectations right. 

The only thing I’d change is your first sentence to say that the scheme does not provide tax relief on lump sum contributions rather than just contributions. The NHS scheme operates on the net pay arrangement and if you’d been paying your additional pension monthly it would have gained tax relief. It’s just the lump sum that doesn’t gain tax relief automatically. 

Dazed_and_C0nfused

Tree10 said:

Last question before I submit my letter...

What postal address do i submit it to? It is not about PAYE, or self-assessment. I can see a different departments  have different postal codes so  i dont want to mess it up by sending it to the wrong one

It is about PAYE.