One off pension payments

canarydan

Evening all.

Quick question, for this tax-year I've received a lump sum for consultancy work on top of my PAYE salary. The amount pushes me into the £50k bracket, but as I have three kids, the child benefit tax charge means that I'll essentially be paying around 70% of anything above 50K to the Treasury. To mitigate, I used the Cycle to Work scheme but also chucked some cash into my pensions so that when I do my tax return, I can essentially declare an income of under £50,099, so nothing will be owed with regards to child benefit tax. However, I kept delaying and delaying and before I knew it, we're near the end of the tax year. I quickly logged on tonight and made the necessary payments into my pensions. They said that it would take up to 10 working days to process.

So, my question is, will the payments made this late be eligible to deduct from this year's earnings? Will it count the date I made the payment, or the date they were actually put into the pension fund?

Many thanks.

Dazed_and_C0nfused

Just to be clear RAS pension contributions don't reduce your taxable income.

But they do reduce your adjusted net income, which is key for HICBC.

I would expect them to qualify for 2022:23 but worth checking the date they are treated as paid with your provider.  It's still only 2 April today.

canarydan

Dazed_and_C0nfused said:

Just to be clear RAS pension contributions don't reduce your taxable income.

But they do reduce your adjusted net income, which is key for HICBC.

I would expect them to qualify for 2022:23 but worth checking the date they are treated as paid with your provider.  It's still only 2 April today.

Cheers. I just asked you the same thing in another thread so you can ignore that.

I split the payment across two pensions; one quoted that it could take 10 working days to appear in my fund and the other said 5 working days. But appearing in my fund doesn't necessarily mean date paid, does it?

Dazed_and_C0nfused

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm041000#IDA0QUFG

canarydan

Dazed_and_C0nfused said:

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm041000#IDA0QUFG

Perfect. I did it online via debit card, and HMRC states the payment date counts as "The date on which details are received by the scheme administrator".

Considering I received an emailed acknowledgement, even if automated, says to me that they have received the details so I'm going to deduct those payments from my adjusted net income on my Self Assessment.

Jeremy535897

As I said on a different thread, it will be more difficult if the pension provider has decided it falls into 2023/24, whatever the technicalities. Check that they will allocate it to 2022/23.

canarydan

Jeremy535897 said:

As I said on a different thread, it will be more difficult if the pension provider has decided it falls into 2023/24, whatever the technicalities. Check that they will allocate it to 2022/23.

Will that make a difference? The link Dazed_and_C0nfused shared stated that;

Deemed date of contributions

The date of payment of the contribution depends on what method is used to pay it.

Cheque

The date the cheque is given to, or if posted received by, the scheme administrator.

Debit/credit card

The date on which details are received by the scheme administrator.

Direct debit

The date authorised to draw the sum from the member’s bank account, i.e. the date set out in the direct debit mandate. This is subject to the proviso that:

• the correctly completed direct debit mandate has been received, and
• the funds requested under the direct debit mandate are actually received.

I read that as, for HMRC purposes, the contribution date is essentially when the payment is made, or the payment instruction is received by the provider. They could take two months to allocate it to the fund, but that wouldn't change the contribution date. I suspect that if my self assessment was pulled out for audit, they would make enquiries with my pension providers and that would raise suspicion, but as long as I could evidence that the payments were made in the appropriate tax year then it would be tickety-boo. That's how I understand it at least.

Jeremy535897

Pension providers are a law unto themselves. Note that the link says:
"In order to avoid disputes in this area, some pension providers make arrangements so payments made near to a tax year are held over outside the scheme until the following tax year. Others might simply refuse to accept such payments at all, and send the cheque or payment back. Both approaches can be acceptable under the tax rules providing they are legally effective in deferring or negating acceptance of the contribution under the scheme as appropriate. Such arrangements must not be structured so as to create actions under the scheme or scheme payments, else the pensions tax rules may apply, and the return can be an unauthorised payment."

canarydan

Jeremy535897 said:

Pension providers are a law unto themselves. Note that the link says:
"In order to avoid disputes in this area, some pension providers make arrangements so payments made near to a tax year are held over outside the scheme until the following tax year. Others might simply refuse to accept such payments at all, and send the cheque or payment back. Both approaches can be acceptable under the tax rules providing they are legally effective in deferring or negating acceptance of the contribution under the scheme as appropriate. Such arrangements must not be structured so as to create actions under the scheme or scheme payments, else the pensions tax rules may apply, and the return can be an unauthorised payment."

I'll probably call them tomorrow to make sure, although both payments have appeared on my bank statement, so they've taken my money.

Jeremy535897

canarydan said:

Jeremy535897 said:

Pension providers are a law unto themselves. Note that the link says:
"In order to avoid disputes in this area, some pension providers make arrangements so payments made near to a tax year are held over outside the scheme until the following tax year. Others might simply refuse to accept such payments at all, and send the cheque or payment back. Both approaches can be acceptable under the tax rules providing they are legally effective in deferring or negating acceptance of the contribution under the scheme as appropriate. Such arrangements must not be structured so as to create actions under the scheme or scheme payments, else the pensions tax rules may apply, and the return can be an unauthorised payment."

I'll probably call them tomorrow to make sure, although both payments have appeared on my bank statement, so they've taken my money.

Good idea, but it is encouraging that they have banked the money.