Self Assessment - Personal Pension Payments Amount 12 August 2022 at 3:22PM in Cutting tax 6 replies 141 views

idontknow2

Hi,
Could someone confirm the amount listed on my tax code under "Personal Pension Payments" should equal the amount that I personally pay into my pension as a gross figure and not include any contribution from my employer?  The reason I ask is my current figure is 17.5k and HMRC say its based on my previous years contributions or a figure I gave them (I don't recall every giving them a figure) and I contributed in last year and the year before around 35K with my employer around 5k to make the 40K max.  

I don't want to change it to what I believe should be 35K so it increases my tax-free amount and then get a tax bill at the end of the year.   
Apologies if its a daft question.

Dazed_and_C0nfused

Your tax code is simply an estimate which should be based on the latest information.

The actual amount added is to ensure you get any higher rate relief due.  Albeit on a provisional basis.  For example if you contribute £5,000 and are due higher rate relief on it all the tax code allowance will usually be £2,500.

This is assuming you are using the relief at source method of contributing.  

You should never include employer contributions in any form, conversation or letter to HMRC relating to your tax code or pension tax relief.

Jeremy535897

Do you complete a tax return? I assume you do, but if you don't, and your code only allowed £17,500 in a past tax year and you contributed £35,000, you should be due a refund.

idontknow2

Yes I complete a return and have done for a few years.  The 17500 is the allowance for this year so my tax code is 2738T.  Last year is was a lot lower because I contributed into my pension using salary sacrifice which is taken pre-tax and NI as I understand it.

idontknow2

Dazed_and_C0nfused said:

Your tax code is simply an estimate which should be based on the latest information.

The actual amount added is to ensure you get any higher rate relief due.  Albeit on a provisional basis.  For example if you contribute £5,000 and are due higher rate relief on it all the tax code allowance will usually be £2,500.

This is assuming you are using the relief at source method of contributing.  

You should never include employer contributions in any form, conversation or letter to HMRC relating to your tax code or pension tax relief.

Ah, that stacks up then as it is roughly half of what you contribute as you get the tax allowance from the pension provider for the 20%.  Then the figure on my tax code is to cover the element I claim back as a higher rate payer as part of my return, right? 

Thank you

Dazed_and_C0nfused

Yes.  On a provisional basis, it's your Self Assessment return that establishes the actual position.

And then HMRC usually use that to estimate the tax code for the next tax year.  For example if you file a 2021:22 return now then your 2022:23 tax code would be updated to reflect what was on your 2021:22 return.  But that tax code change isn't giving you the tax relief due for 2021:22, it's provisionally allowing relief for 2022:23 based on the 2021:22 information.

You have misunderstood salary sacrifice though.  That means you haven't contributed anything to your pension.  You have agreed to a lower salary in return for increased employer contributions.  And that is why no pension tax relief gets added by the pension company as none is due on employer contributions.

You don't need to tell HMRC about salary sacrifice contributions.

Last year is was a lot lower because I contributed into my pension using salary sacrifice

idontknow2

thanks for the response.  I think I get the salary sacrifice element I just phrased it incorrectly.  It is my employer paying it but essentially its my salary that's reduced to foot the bill but thanks for confirmation html, body, table, thead, input, textarea, select {color: #bab5ab!important; background: #35393b;} input[type="text"], textarea, select {color: #bab5ab!important; background: #35393b;} [data-darksite-inline-background-image-gradient] {background: linear-gradient(rgba(0, 0, 0, 0.5), rgba(0, 0, 0, 0.5))!important; -webkit-background-size: cover!important; -moz-background-size: cover!important; -o-background-size: cover!important; background-size: cover!important;} [data-darksite-force-inline-background] * {background-color: rgba(0,0,0,0.7)!important;} [data-darksite-inline-background] {background-color: rgba(0,0,0,0.7)!important;} [data-darksite-inline-color] {color: #fff!important;} [data-darksite-inline-background-image] {background-image: linear-gradient(rgba(0,0,0,0.3), rgba(0,0,0,0.3))!important}