Timing of the 20% topup on pension contributions

hallmark

Am I correct in thinking the concensus view is that if you pay money into a pension prior to April 6th 2023 and the 20% Government topup occurs after April 6th 2023, both count towards the 2022-2023 tax year?

thanks 

trevjl

I rang Aviva last week and asked the similar question. They said the money needed to be in  Their account by 5pm on 5th, the top up is done automatically and is in this years tax year.

dunstonh

hallmark said:

Am I correct in thinking the concensus view is that if you pay money into a pension prior to April 6th 2023 and the 20% Government topup occurs after April 6th 2023, both count towards the 2022-2023 tax year?

thanks 

It is not a top up.  Tax relief is a reduction in your gross contribution to the pension.   The fact that some providers do not immediately fund the tax relief doesn't change the date of the pension contribution.

So, if you make a pension contribution upto 5th April 2023, then it is classed as being in this tax year.  When the provider receives the tax relief or whether they pre-fund it or not does not matter.

Prism

Its 25% added on not 20%

TiVo_Lad

As @dunstonh has correctly pointed out, it's in which tax year the contribution takes place that matters. As @trevjl has also mentioned, timing is important. Your own Pension provider will have a deadline for receiving and processing contributions (just like ISA providers do), so check with them what their particular deadline is. If they receive your money by the deadline (NOT you sending the money by the deadline; they must physically have it), then you'll get the tax relief in that tax year. If you miss the deadline, both the contribution and the tax relief will take place in the following tax year.

hallmark

TiVo_Lad said:

As @dunstonh has correctly pointed out, it's in which tax year the contribution takes place that matters. As @trevjl has also mentioned, timing is important. Your own Pension provider will have a deadline for receiving and processing contributions (just like ISA providers do), so check with them what their particular deadline is. If they receive your money by the deadline (NOT you sending the money by the deadline; they must physically have it), then you'll get the tax relief in that tax year. If you miss the deadline, both the contribution and the tax relief will take place in the following tax year.

Thanks, in this case it's Vanguard, paid today Debit card. It already shows under "contributions this tax year".

mcfly998

I paid into my Fidelity SIP this afternoon by Debit card.  The cash is showing in my account, but when I check the transaction it is showing as having a settlement date of 06/04/23.  So I don't know if it will actually go against my 22-23 allowance or not. 

Any thoughts, while I wait for them to get back to me?

plumb1_2

hallmark said:

TiVo_Lad said:

As @dunstonh has correctly pointed out, it's in which tax year the contribution takes place that matters. As @trevjl has also mentioned, timing is important. Your own Pension provider will have a deadline for receiving and processing contributions (just like ISA providers do), so check with them what their particular deadline is. If they receive your money by the deadline (NOT you sending the money by the deadline; they must physically have it), then you'll get the tax relief in that tax year. If you miss the deadline, both the contribution and the tax relief will take place in the following tax year.

Thanks, in this case it's Vanguard, paid today Debit card. It already shows under "contributions this tax year".

I was informed by Vanguard today that funds are only available to invest after one banking day after a debit card payment. As I paid over £5k by debit card early this morning and it wouldn’t let me invest. So secure message sent, and got a reply just a little after 9am.

dunstonh

mcfly998 said:

I paid into my Fidelity SIP this afternoon by Debit card.  The cash is showing in my account, but when I check the transaction it is showing as having a settlement date of 06/04/23.  So I don't know if it will actually go against my 22-23 allowance or not. 

Any thoughts, while I wait for them to get back to me?

Cash doesnt have a settlement date.  Only sales and purchases of shares/units does.  

EthicsGradient

In 2021, when Easter Monday was 5th April, I asked AJ Bell if the regular direct debit they took was going to be in 2020-21 (last working  day 1st April) or 2021-22 (1st working day 6th April). They assured me that, whatever shows up on the cash statement (which ended up as the 6th April), it was the day they asked for the debit that would count, which was in 2020-21, and not the date it shows as cleared and available for investment..

Albermarle

mcfly998 said:

I paid into my Fidelity SIP this afternoon by Debit card.  The cash is showing in my account, but when I check the transaction it is showing as having a settlement date of 06/04/23.  So I don't know if it will actually go against my 22-23 allowance or not. 

Any thoughts, while I wait for them to get back to me?

Presumably you have bought an investment with the cash? The is always a delay inbetween placing a purchase order for an investment, and the final settlement of the transaction.
For a tax year point of view all that matters is when you deposited the cash on the platform.