Claiming higher rate tax relief on pension contributions

Stargunner

My P800 shows my total income from my employer and also untaxed interest to give a total income of the 2 added together. I just wanted to ask if anyone knows that when I write to HMRC to claim back my tax relief, is the figure based on just the income from my employer or does it also include the interest from untaxed interest. 

As an example: If my income from my employer was £55000 and my untaxed interest was £2000, giving £57000 total income and I paid in £10000 to a SIPP, could I claim back tax relief on £5000 or £7000 of my contributions.

Dazed_and_C0nfused

You don't claim relief on fixed amounts.

Your basic rate band will be increased by £10,000 (assuming you mean a gross contribution of £10,000).

The tax charged on your employment income will be adjusted to reflect the increased basic rate band - with the figures provided it will all (above the Personal Allowance) now be taxed at 20%.

And the interest will be taxed £1,000 at 0% (savings nil rate) and £1,000 at 20% savings basic rate).

Total taxable income £57,000
Personal Allowance £12,570
Income to be taxed £44,430
Basic rate band £47,700

Stargunner

Thank you for your help, that makes sense

Dazed_and_C0nfused

Given you already have a P800 you can simply recalculate the liability using the increased basic rate band to see how much a reduction in tax due or tax overpayment there will be once you provide HMRC with the pension contribution details.

Stargunner

Thank you, I will send them a copy of my P800 along with proof of my additional contributions,  which will drop me down to the 20% tax band and increase my limit on untaxed interest up to £1000.