Can someone check my higher rate pension tax relief

trenchwars

Am i correct that my allowance for tax year 21/22 should have been £2000 not £1500 and my tax code 1257L + 200 i.e. 1457L.

Thanks James.

NoMore

What was your total income for the year ?

Marcon

trenchwars said:

Am i correct that my allowance for tax year 21/22 should have been £2000 not £1500 and my tax code 1257L + 200 i.e. 1457L.

Thanks James.

No. If you are in a 'net pay' scheme (completely misleading terminology!) your personal contribution is deducted before tax, which is how you get tax relief at your marginal rate.

If you are in a 'relief at source' scheme, your personal contribution is deducted from your post-tax salary. The pension provider claims basic rate relief on your behalf and adds that to your pension pot. You claim any higher rate relief either through your self assessment tax return, or direct from HMRC. You can only reclaim higher rate tax to the extent you've paid higher rate tax in the first place e.g. if only £500 of your annual earnings are subject to higher rate tax, only £500 of your pension contributions are eligible for higher rate relief. 

Dazed_and_C0nfused

It looks to be a relief at source contribution so you don't get an extra allowance for that, it increases your basic rate band.

For tax code purposes your tax code allowances are increased to mimic the effect of the increased basic rate band.

Is the screenshot showing details from a tax calculation for 2021:22 or a tax code for 2022:23?

trenchwars

The screenshot is the tax code for 2022:23. My tax code for 2021:22 was 1414L which I assume was based on the same pension allowance of £1500. My understanding is that SIPP providers do not tell HMRC about pension contributions so I have to tell them and I increased my net contribution from £3k to £4k last year so I assume they are basing my taxes on the old amount.

It's a SIPP that I am paying into from my bank account i.e. post-tax income and I am a higher rate payer. The pension provider claims back the basic rate 20% relief and I have to claim back the 20% higher rate relief by HMRC adjusting my tax code. I assume as I made a net contribution of £4000 then my tax code needs to increase by half i.e. £2000 to claim the other half of the relief.

I did pay some higher rate tax last year so I didn't run out of money to claim back.

Dazed_and_C0nfused

There is no fixed extra 20%.

It all depends on your overall tax position.

Any tax relief due for 2021:22 will be given by extending your basic rate band, either via a Self Assessment return if you file one or a P800/PA302 calculation  from HMRC if not.

If that is a tax code adjustment in your screenshot and it's based on an assumption you will be due higher rate relief on the whole lot then it is likely to reflect an estimated gross contribution of £3,000.  Or alternatively that you aren't due higher rate rate relief on all of a larger amount

Additional tax code allowances of £1,500 save you £600 in tax.  £3,000 x 20% = £600.